I’m not falling for that again!
They wouldn’t let me cash my tickets until after the investigation.
I’m lazy (there, I’ve said it). I’d buy two dozen or so winning tickets, then gift them to friends and relatives, leaving them to figure out their tax situations.
In 1980, local tv guy Nick Perry rigged the Pennsylvania daily number, forcing a 666 drawing.
Interesting tale.
Depending on the lottery, this can be surprisingly difficult. Of course it’s easy in those lotteries where you pick your own numbers, but it can get hard in those schemes where you buy a ticket with a pre-printed number on it - in such cases you’d have to actually find the winning ticket to buy. A notable example is the famous Spanish Christmas lottery, where each number exists many times (owing to a large number of series, each with consecutively numbered tickets, and to the practice of subdividing tickets into “décimos” which cost only 10% of a full ticket but collect only 10% of the winnings). Many places in Spain, including newsstands and local churches, sell tickets and will publicly post the numbers they have to offer. Players who, for whatever reason (e.g. superstition), want to play a particular number go to great lengths to get to a vendor who has that particular number.
Just because they don’t collect it from you doesn’t mean you don’t owe it. I don’t have to 1099 (send an informational form to the IRS and contractor regarding monies paid) any contractors I use for less than $600, but they’re still supposed to pay tax on that money.
Now, true, if you’re paid in cash, you can hide that money from the IRS, and they may be none the wiser. But put your billion paid out in $500 increments in a bank account or all of a sudden live conspicuously above your means, and you may raise the suspicions of the IRS. And this is avoiding logistical questions like, where are you going to hide $1B in cash; how are you going to collect $1B in $500 increments; how are you going to buy all those tickets in the first place; how is nobody going to notice the oddness of all these winners, etc.
I once asked the question about whether someone had ever played the same numbers and won a bigger share of the jackpot. There were a couple of ‘yes’ answers in that thread.
If you don’t want to flee the country, I think to maximize your take, immediately rent an apartment in a state where there are no state income taxes and the lottery winner can remain anonymous, and buy your ticket(s) there. I don’t know if that combination exists, though. It wouldn’t surprise me in the least if every state that allows winners to remain anonymous also has a state income tax.
I think you’ll want to remain anonymous if at all possible. This will reduce your post-win security costs.
Definitely buy at least two winning tickets, for reasons mentioned upthread. I think I could plausibly get away with buying three jackpot winners without suspicion if I go to different stores and buy multiple tickets at each store, and along the way buy multiple duplicate non-winners too. Some of those non-jackpot winners could net a tiny bit more (relatively) by being winners that match all but the Powerball or some lesser combination. That would increase plausibility; you could say “I had a hunch that five of these would be right but I wasn’t sure about the sixth so I covered my bases!”
While typing this, it occurred to me that there would be some kind of investigation of the winner that “just happened” to buy multiple winning tickets. The chances that the winner’s name would be leaked to the press increases dramatically, blowing the anonymity benefit.
No; your income for the year is tallied up and taxed no matter how many individual payments it came in. Some types of payment (paycheck income vs capital gains vs various other things) are taxed differently from each other, but that’s not an issue here.
The only reason to bother with multiple tickets is to increase your share if other people also played the winning numbers.
Only in America are people concerned about the tax ramifications of a billion dollar profit on a one dollar investment.
The maximum corporate tax rate is currently 21%, while the maximum individual tax rate is 37%. Could you set up a corporation to purchase, own, and collect on the tickets to leverage the discrepancy? You’d own 100% of the stock in the corporation.
If you continue to own all the tickets, there is no difference.
If you plan to transfer tickets to other people (or trusts) before the drawing, you could use multiple tickets to to avoid potentially all the other gift tax you would otherwise face. Let’s say you buy 100 tickets. You could give the ticket to your niece when it’s only worth $2, which is below the gift tax trigger. After the drawing, she gets the benefit of the full amount of her share of the jackpot. Because income taxes are graduated, if you spread the wealth far enough, there would be some income tax savings.
Or Canada. I have heard that they don’t tax lottery winnings. Not sure if it would apply to winnings from a US lottery.
The lottery may not withhold taxes on winnings of less than $600 but you are still responsible for taxes on the winnings for all of them. This has no real tax effect. The money you spent on 1.7 million tickets would be deductible against your winnings but that’s immaterial in this case.
This is a question that amounts to, “How can I cheat on my taxes and will I get caught?” I’m not going to answer that.
So far as I know, all the “jackpot” rules would apply so you would have to go through the normal claims process. 1.7 million times. And the lottery would add all your winnings together to conclude that you won more that $600 and send you all the tax forms.
I’d rather buy ten different tickets and increase my chances of winning tenfold. I’d be happy to share my winnings if someone else gets lucky too but you do you.
This is a perfectly reasonable strategy, in fact.
I don’t see why not. There are probably tax savings strategies to make this a zero tax event until you repatriate the funds to the US. A little tax planning goes a long way.
I think what he’s getting at is that they’re divided among the winning tickets. So if you bought one ticket, and someone else bought one, it would be split 50:50.
But if you bought 3, and they bought one, it would be split 25:25:25:25, with you holding 3 of them, and them holding one. You’d get 3/4 of the jackpot rather than half.
I think I might keep it somewhat circumspect- maybe buy a couple, but not any more. I think you could make the argument that you had a vision, or you had a ‘feeling’ and played your lucky numbers, and get away with that. But if you bought 1000 tickets with the winning numbers? They’d be all over you with the investigation, and you’d probably have to justify it to some extent.
One thing I’d do is figure out where I wanted to buy them, as the shop owner gets a prize of their own when you win the lottery- here in Texas, it’s 1% up to a cap of $1 million. So choosing who I would be giving that million dollars to would be something I’d carefully consider. Just off the top of my head, I’d probably choose a mom-and-pop outfit of some kind, not a chain grocery store.
As far as the trusts go, I think I’d set up trusts and have the lawyer for the trusts accept the winnings. And I’d name the trusts something completely obscene that they can’t say on the news or print in the newspaper.
If you can make a reasonable estimate of the number x of winners other than you, then your winnings if you buy an additional number y of winning tickets will be y/(x + y) of the total prize fund. You can then set the first derivative of that function to zero and solve for y to get the optimum value for y, where your marginal cost of buying and cashing an additional ticket exactly equals your marginal benefit of getting a higher share of the total prize.
This assumes that the total prize fund is constant, which I believe it isn’t since the money you pay for your tickets partially feeds into the overall prize pool (AFAIK). But the general idea still holds.
I’ll agree - buy maybe 2 or 3 (2 gives the plausible excuse - “I forgot I bought the first one… I meant to buy for the following lottery, it’s my lucky numbers,” etc.) IIRC you can buy the same numbers to play on multiple draws, so if you know far enough ahead you can buy the assortment one week for the next 5 weeks, then again the next week…
When the Powerball was topping a billion, there were news items about how different states were hoping the winning ticket would be sold in their state - IIRC, North Dakota(?) was saying the income tax from that jackpot could be a significant chunk of that year’s total revenue. That big a jackpot, that trivial a state. You pay state income tax where you earn it (i.e. the state lottery agency that sold you the ticket), as well as where you reside. Thanks to Trump, as I understand, state taxes paid are no longer deductible from federal income tax… But presumably taxes from stat A are deductible from what you would owe in B. Just don’t buy in NYC which also has an income tax?
Yes, Canadian lottery winning are tax free - but there is a withholding anyway for federal and out-state/foreign winners if a Canadian or someone out of state wins an American lottery. better to win the Canadian lottery, or win the Powerball which greatly exceeds the $70M max in a Canadian lottery. (I think it was Ringo Starr back in the Beatles days who said “we have highly paid accountants who tell us, the more money we make, the more money we have after taxes…”)
I heard of some people in a company I worked for who won the big jackpot in Canada, so tax-free. 11 people split the winnings. Unfortunately, there was (amazingly) 8 different winners of the main jackpot of about $3M. Usually there are only 1 or 2, sometimes 3. So each winner got to boast - “I won a million-dollar lottery” and took home about $30,000. Still nothing to sneeze about.
Here’s the recent LottoMax breakdown:
7/7 No winner $41,753,584.00
6/7 + Bonus 1 winner $196,118.30
6/7 53 winners $3,700.30
5/7 + Bonus 128 winners $919.30
5/7 2,659 winners $103.30
What you also need to do is come up with a plausible reason that you played an assortment of numbers that include your “favorites” so you also win several of the associated lesser prizes. note these prizes share a pool of money too, but having a random assortment of tickets means you get a greater share of the total pool.
Of course, even 1 winner of $196,000 is somewhat trivial compared to $42M, and a dozen or more winning tickets of $3700 even less so… But they would make nice stocking stuffers, or tip for the waitress.
One of the biggest scams was ticket retailers switching tickets. The ultimate -
However, a statistical analysis of winning retailers in Ontario established that far too many had won than was reasonably possible, and there have been several accusations of ticket theft. As a result, in Canada now a lottery retailer can lose their license if they handle a ticket that has not been signed by the owner.
This is the real solution to the suspicion issue. Assuming you have the time, of course. Establish a history of buying multiple copies of the same numbers, so when you finally win, you can point to this history, saying, “Hey, that’s just me being weird, like always!”
Funny thing is, 538’s The Riddler just had a puzzle about this a few weeks ago. Basically, your a time traveler you knows the winning combo for an upcoming $10 million dollar lottery. But you also knew that 10 other people were going to each buy one winning ticket. So how many tickets (at $1) do you buy to maximize your profit?
The answer: 9,990
As I understand it, the US will withhold taxes based on their usual tax rates, but as a Canadian citizen, we can apply for at least a partial refund under certain tax treaties we have with the US. We won’t get it all back, but when you’re talking about prizes in the hundreds of millions, even getting 10% back can be quite a lot of money.
Moving to Canada and renouncing your citizenship will not work. The IRS considers any income within 10 years of renunciation taxable. You say “F**k 'em”. It won’t work. The entity that pays the prize will not care and remit the IRS’s share to them.
Also I am sure a genuine foreigner who wins a US lottery is not taxed. I suspect it is considered US income and taxed.
As far as anonymous, my good friend’s SIL won an Ontario lottery (not a huge prize, only $400,000) and asked to remain anonymous. Charities started soliciting her within a half hour after she turned in her ticket. If that had happened to me, I’d have asked what other illegal activities they engaged in since they had obviously bribed someone.
A slightly different take: what if you bought two tickets and turned in one this year and waited till January to turn in the other. There might be a minor tax advantage in spreading out the winnings over two calendar years. But many of these lotteries allow you to spread the payout over many years anyway.
If the jackpot is $1 billion, I’d buy multiple tickets, but also buy a few tickets to give friends and family. Someone has already explained the gift tax implications, but I would also want them to have the ticket as their own win. I think there would be less awkwardness in the relationships if each person had their own share(s). I would especially want to avoid relatives coming to me asking for money. I don’t have tons of close relatives or friends, so giving everyone a share of the prize should make everyone have a sizeable chunk of money.
I would also limit the number of tickets I purchased because I wouldn’t want to spend a year or more submitting millions of tickets.
I would also sit down with the lottery rules and read them very carefully before doing any purchasing or gifting, to be sure to do it all within the rules.
Did she cash it in person? Does she have a cell phone? Google or Apple would know she made a one-time visit to lottery headquarters. My hunch is that some charities have figured out that’s a good market to advertise to soon after they leave. There are a million other similar correlations that Google could draw from people’s behavior that might mean they won the lottery and that charities and investment advisers are suddenly interested in them.
Big data is weird. A decade ago, Target could tell pretty reliably when a person learned they were pregnant by a single change in their purchasing behavior. Google and Apple have orders of magnitude more data about people than Target. What they can infer about us is horrifying to contemplate.
People don’t realize how insidious personalized advertising is and they assume it’s all eavesdropping and spies. I tend not to believe that when there are plenty of mundane explanations for their experiences.