How Much Do Lottery Winners Pay in Taxes? $669.8M Jackpot! - YouTube

wow someone just won the powerball jackpot  worth 699.8 million dollars and it's the  

seventh largest jackpot winning in us history  and it got me thinking okay how much do lottery  

winners pay in taxes because the winner definitely  definitely does not take home the full amount that  

is advertised during the lottery and of course a  large part of the lottery winnings are immediately  

withheld for taxes and you'll likely owe the rest  during the next tax season and at the same time  

the winner would also be bumped into a higher  tax bracket which means they'll owe a larger  

percentage than what they're used to paying to the  irs so in this brief episode what i want to do is  

break down how much taxes the recent 699.8 million  dollar jackpot winner may pay in taxes stay tuned

okay let's go to get into this could you imagine  winning 699 million dollars what would you do okay  

would you buy a mansion would you buy a fancy  car would you invest it or would you go to mars  

okay but seriously what would you do now with me  being an accountant i already know that the taxes  

are coming so my first move would be trying to  figure out the net take-home pay after taxes  

before i do anything else which by the way if you  do ever win a lottery i would suggest that you do  

the same thing and this video should help you do  just that so let's go through the estimated tax  

bill for this lottery winner of 699.8 million  dollars but we'll go ahead and round it up to  

700 million dollars just to make the math a little  bit easier to follow so the first thing number one  

the lottery winner will have to decide  whether or not they want to take a lump  

sum amount or if they want to take an annuity  so in this case the winner could opt to take  

490 million dollars as a lump sum which  immediately means they're giving away 200 million  

dollars or the winner could take home the annuity  that pays the full amount of money but over a  

30-year period which means they'll basically  get roughly 23.3 million dollars per year  

for 30 years okay so which one would you take  would you take the 496 million dollar lump sum  

leaving 200 million dollars on the table or would  you take the 23.3 million dollars per year i'm  

super curious okay tell me in the comment section  below and i'll tell you exactly what i would do  

in a minute but first let's talk about the taxes  so on the 496 million dollar lump sum payment you  

will pay roughly 183 million dollars in federal  taxes which is 496 million times the highest  

federal income tax rate today which is at 37  percent but it doesn't end there because you would  

also have to pay some state taxes as well now in  a state like new york the lottery winner will pay  

approximately an additional 45 million dollars  in taxes so in this scenario if you take the lump  

sum amount of 496 million dollars there will be  an estimated tax payment of 228 million dollars  

leaving a net brain home take home pay of 268  million dollars okay would you take it before you  

answer that let's look at the taxes on the annuity  but really quick before i do if you're new to our  

channel hey i'm sean with life accounting the  accounting company that helps you save on taxes  

and build more wealth if you find this video topic  to be interesting as much as i do then please do  

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more people who want to learn about lottery taxes  so if you decided to take the annuity payment  

remember you would get the full lottery amount  but over a 30 year period which would be close  

to 23.3 million dollars per year and at that rate  you will likely owe about 8.5 million dollars per  

year in federal taxes which is 23 million times 37  percent and if you live in a state like new york  

you would pay about 2 million in taxes per  year leaving a net income or net take home pay  

of 12.8 million dollars per year and if you  add up all the taxes over a 30-year period you  

would actually pay more in taxes because remember  you're taking home more money which would be a 315  

million dollar tax payment over 30 years so  if you're following along with me then you're  

starting to realize that the taxes are kind of  similar and at this point you're probably thinking  

that a lump sum payment is a lot more attractive  okay but here's the thing okay and here's what i  

would do okay i would take the annuity payment for  two big reasons and i'll also give you a third one  

as well so number one which is pretty obvious okay  it gives you the most earning potential over the  

next 30 years okay you make more money and if you  are young like me then god willing you still have  

some time okay and number two and more importantly  i would deploy different tax strategies every year  

to help reduce my taxable income and in that way  i would be able to take home more money and pay  

fewer taxes just like the ultra rich people  do and so maybe that net 12.8 million dollars  

that we talked about earlier turns into a net 20  million dollars and over 30 years i'm taking home  

over 90 percent of my winnings versus a lump  sum payment where you have one tax year to find  

the right tax deductions and the right tax credits  and the right investments i mean in one tax year  

that's pretty much impossible all right so  you're probably not going to have the time  

to be able to put together at least carefully  think about putting together a tax strategy  

if you take the lump sum payment which leads me to  reason number three that i would take the annuity  

because having the lottery money dripped over time  in an annuity payment allows me time to actually  

learn how to properly manage this new wealth and  learn how to smartly invest my money and there's  

all kinds of stories out there of lottery winners  or even big nfl and nba players who end up going  

broke because they did not know how to manage  their money and the truth is it really takes time  

to learn how to master wealth but anyway that's  just what i think okay what do you think don't  

forget to tell us in the comment section below  if you would take the lump sum or the annuity  

now if you want to learn more about individual  or business tax strategies then we have two  

more videos coming up next that you should  definitely check out and we'll see you over there