For whatever reason you happen to know what lottery numbers will be drawn this weekend. Let’s say the jackpot is very high, like 1 billion dollars.
Knowing what you know, what’s the most beneficial way to play?
My thought is that the more tickets with the winning numbers the better. Is that correct?
For tax reasons aren’t you better off claiming multiple tickets individually each set up under a trust? Or in the end would that not matter?
Say you planned on using the money in trusts for your children, relatives, etc… Would it be better to have separate wins to set up or would it not matter? Would it be better to set up trusts like that or just give them one of the tickets with the winning numbers to cash in themselves?
Wouldn’t it be wise to assume someone else was also going to pick the winning numbers. Wouldn’t it be better to have thousands of tickets with the winning numbers to increase your take?
Are you assuming there would be no repercussions from your behaviour - that nobody would regard your sudden purchase of hundreds/thousands of the same numbered ticket as evidence of some sort of fraud (even if it were just your magic psychic ability)?
I guess that’s another way of saying: are you weighing ‘trouble’ in the equation of benefit?
Unless I’m misunderstanding your question, buying any more than 1 of the winning ticket doesn’t do a bit of good, since the jackpot is divided among the winning tickets.
If the jackpot is a billion dollars, and you buy one winning ticket, you get…$1 billion. If you buy a hundred winning tickets, it’s divvied up into a hundred winning tickets of $10 million apiece…all still yours, so, still the same, a billion dollars.
Not that this is the thrust of the OPs question, but having >1 winning ticket would be beneficial in the event someone else coincidentally picked the same winning number. Having 9 tickets against someone else’s 1 would, presumably, entitle you to 90% of the jackpot as opposed to only half.
Is there any tax benefits to having multiple tickets? Say having tens of thousands of tickets. Wouldn’t each one be taxed at a lower rate than 1 billion would, or is the total income at the end of the year all that counts with lotteries just like any other income.
Also, what about the risk of someone else having a winning ticket? If I have 1 winning ticket and somebody else has one my take is only 500 million. But if I have 1000 winning tickets to their one, well, you get the picture.
I’m pretty sure the IRS will tax you on your total income, regardless of how much each winning ticket was. You would be taxed for the whole $1 billion no matter what.
As for the second question, ASL_v20 had a good point, which is that by buying more than 1 winning ticket you therefore dilute the damage that someone else could do to you by playing the same winning number. But this only works if, as you said, you aren’t concerned with the suspicion factor and don’t worry what authorities would think of someone weirdly buying many tickets of the same winning number. In real life, it would definitely draw unwanted scrutiny and you’d be better off buying just one winning ticket to avoid suspicion.
Tax-wise, your optimum strategy would be to move to a tax haven, renounce your US citizenship (because US law taxes citizens globally, regardless of residence), and then play. Of course, it might be difficult to pull all that off before next weekend.
I don’t know the details in your lottery, but in Germany you have to get six numbers right out of 49 possible numbers and one additional one out of ten to get the jackpot, and you can play tickets where you bet not on six but on seven, eight or nine numbers at the same time (plus the one out of ten separate number). It seems to me it would be better to buy several such “permutation” tickets, even though they are much more expensive, because you would win the jackpot every time and twelve “five out of six” and 72 “four out of six” on top of the jackpot. Every one of those wins is higher than the additional cost of every bet, so it is worth it. If you want to be greedy, be really greedy.
In Germany lottery wins are tax free windfalls. In Swizzerland they are taxed at 25%, I wonder if the taxes are uniform in every state in the USA. If you know the numers in advance it might be worth the trouble of moving residence to save some millions. Or founding an enterprise or a trust or a charity to bet on your behalf, ask a tax advisor.
This advise is worth 15% of your additional earnings and tax savings.
AIUI, this still wouldn’t affect the way the IRS taxes you. One way or another, you’d be on the hook for a total income of $1 billion for the year. They’d assess you that way.
Sure but how? If I play a 6 number lottery and get 4 numbers I win $500 that I can collect at any outlet for cash without showing ID, Social Security number, or even signing the back of the ticket.
If the jackpot were spread out over 1.8 million tickets worth only $500 each wouldn’t it work the same way or would I still have to go through the claim process like I would if I won the billion in one ticket?
I think the $500 thing just means that anything less than $500 the state won’t bother to withhold any of the winnings. But I’m sure you are still responsible for paying any appropriate taxes.
It’s like: If your employer doesn’t withhold enough of your paycheck each month for taxes you still owe that money to the IRS.
Maybe what you’re getting at is: if the $1b prize was broken down into many $499 individual awards would this present an easy way to cheat on the taxes owed?
Maybe, if you consider individually cashing in millions of separate little awards “easy”.
Also the funds in the 4 out of 6 numbers pool are a lot less than the 6 out of 6 pool. You’d do better just paying the taxes on the far bigger jackpot pool.
In the UK, lottery winnings aren’t taxed so that angle is irrelevant but as others have said, If one person wins they get the lot (duh!). If three people win they each get a third share.
What I don’t know is how the lottery overlords would treat a person that bought two winning lottery tickets for the same week. Do they do the split according to “person owning the ticket” or is the split done according to each individual ticket regardless of ownership.
I suspect it is the latter and I’m sure someone somewhere must have bought the same numbers, even by mistake, and won.
So buying two tickets and getting a double share seems sensible and risk free. However, if you think the numbers stand a decent chance of multiple winners (all below 31 for example) then you might want to increase that share and then we get into questions of reasonableness and what might trigger suspicions.
How many identical tickets could you buy before suspicions are aroused? Two? probably not. Two-hundred? eyebrows will be raised but even then I’m not sure what anyone could do about it.
US lotteries are very similar, although the details (how many numbers and what range they’re in) will vary from game to game. I’d say that that scheme would help allay suspicion* if you buy two jackpot tickets. You could claim you made a mistake in buying the second winning ticket. Since there’s usually a year to cash them, you could cash one now and one next year. I think that will reduce taxes, but probably not by much.
BTW, splitting the jackpot among a couple million winning tickets will not let you cash them at the corner store. Even though the payout is <$500, you will still have to go to wherever the place to cash jackpot tickets is (state lottery office, most likely) to get your money.
*yes I know the OP doesn’t care about suspicion, but there it is.
On the odd occasion that I play the lottery, I always play at least ten of the same number for this reason. It reduces my expected financial return, but the benefit is the immense amount it would annoy someone if they picked the same numbers and won but had to share the jackpot with me.
If you frame the question this way, then I suppose, yes, you’d be able to dodge taxes, but only because you’ve hand-waved away about five huge logistical hurdles. I know you said you didn’t want to hear the nitty-gritty pedantic stuff but at a certain point, when you handwave enough stuff away, it essentially morphs the original question into an entirely different one.
In a universe where the lottery doesn’t care that you bought 1.8 million winning tickets (or that you are even able to purchase 1.8 million winning tickets in the first place - are you really going to spend months sitting and writing down or printing the winning numbers on 1.8 million paper tickets? - and the lottery officials grin and say “yup, someone bought 1.8 million of the same number, nothing suspicious or weird here,” and you spend the months of time submitting 1.8 million tickets for your winnings at a rate of one ticket every few seconds, not sleeping or eating, and your bank finds nothing weird about you going from average-income to billionaire - then I suppose it would not be far-fetched that the IRS in this universe would not be investigating you as a tax fraud.
I am not being sarcastic or snarky, btw, not at all. I’m just saying that once you have handwaved so many practical things away, the question is essentially no longer the same as the intended question.
