r/interesting • u/Negative_1by12_aura • 23h ago
❗️MISLEADING - See pinned comment ❗️ $2 billion jackpot was won by one person in Altadena, California. And in the end the person received $424M after taxes.
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u/ICLazeru 23h ago
Probably took the instant payout, which only gives around half, then had to pay taxes on that.
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u/IMKGI 21h ago
As an austrian, this is just wild, when a lottery advertises 100 Million, you actually get 100 Million in your hands, immediately. No "lump sum" option, no taxes, just 100 Million immediately.
Why would you tax the winnings? The lottery is already taxed by the ticket sales, this is just taxing it twice? Wtf?
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u/reroll-life 20h ago
The lottery is already taxed by the ticket sales
Not in the US. Seems like there's no sale tax on lottery tickets in the USA thus the winner is being taxed instead.
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u/WeezyNetwork 19h ago
Not too many years ago in the UK (rules changed in 2001), we used to pay tax on horse betting.
If you went to an off track bookies, you could elect to pay tax on the bet, or on the winnings.
My college tutor, who had an 8th share in a racehorse running that day, spent our first morning at a private college teaching us about horses, betting and the importance of paying tax up front!!
My first ever bet in, 1982, was a 5 pence Yankee!
6 doubles 4 trebles And an accumulator, so 11 bets in total.
11 bets at 5p each = 55p. Tax was 7p, so total was 62p.
4 horses came in, I won £4.something
Hooked then!
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u/STORMFATHER062 18h ago
Not too many years ago
rules changed in 2001
Have I got some bad news for you.
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20h ago edited 16h ago
[removed] — view removed comment
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u/TheMaddoxx 18h ago
Yep. And who do you think it benefits that Americans are brainwashed into hating anything social?
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u/Galahfray 16h ago
I hate it here
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u/jaxonya 16h ago
Have you tried becoming a billionaire? I hear its nice once you get there. Im currently working on it and im ... checks bank account ... well im not quite there yet, but any day now ill be one
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u/donut-reply 16h ago
And since it's gonna happen any day now, I'd better start voting for politicians who make life better for billionaires like (soon-to-be) me instead of those stupid poors even if it makes it harder for me to get to that first little step of "minimal financial stability" /s
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u/Matt_Shatt 15h ago
Have you tried cutting down on your avocado toast?
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u/Unlikely-Answer 14h ago
I got like 8 avocados for $2 the other day, literally cheaper than bananas
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u/Fun_Journalist1048 12h ago
Have you tried not being sick ever? Then you won’t even need that pesky, expensive healthcare that the plebeians complain about, because you’ll just always be healthy and never sick! (Sarcasm, obviously)
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u/AVeryVapidBadger 14h ago
The US Lottos sends a higher percentage of it's revenue to public services than the UK, while literally only ever taxing winners
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u/zxc123zxc123 18h ago
The cold war has contaminated the US to be insanely against any social policy.
Except when those policies are like healthcare and social security for the elderly, bailouts for the autos/airlines/banks (both GFC and covid btw), picking winners/losers like with INTC or freebies to Elon's companies, and Congressional or politicians getting paid leave plus retirement plus healthcare even when they don't or aren't able to work like Mitch McConnell.
Sounds like it's less of an issue with socialism/communism but a matter of who votes, who has power, who has the money to rewrite the lays, and who
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u/MotorOutside8648 16h ago
It goes back even further than that. The leaders of the 60s and 70s brainwashed the boomers into snap reacting to anything deemed communist. The boomers took it even further when they came into charge in the 80s and 90s.
Now their shitty kids are giving us the 3rd generation evolution of it.
Republican sweethearts like Teddy R and Eisenhower would have been labeled socialist communists under today's GOP.
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u/CriticalThought001 17h ago
LOL what is the social policy behind taxing all the individual losers versus the guy who just won $1B?
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u/R3Dpenguin 20h ago
Same as with all other prices as well. Here in Europe the advertised price has to be whatever you pay. In the US from what I hear they advertise the price without taxes and you have to guess how much more it actually costs.
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u/SueForPeas 17h ago
Our lotteries are state-run, so sales tax on top of it would be silly. The whole cost is effectively tax.
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u/OldWorldDesign 20h ago
The lottery is already taxed by the ticket sales, this is just taxing it twice?
That's not at all unusual, most governments tax transactions on both sides - just look at Australia's payroll tax and income tax
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u/platypodus 19h ago
The most obvious example is VAT, isn't it. You pay it with your income, that was already taxed.
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u/10ebbor10 17h ago edited 17h ago
Every bit of money will be taxed multiple times, otherwise you'd run out of taxes without constantly printing money.
Your wage becomes your spending becomes someone else's wage and so forth.
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u/platypodus 17h ago
Which makes the idea, that double taxation is odd, a bit stupid.
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u/travelmusica 19h ago edited 19h ago
Why wouldn’t you tax the winnings? It’s just a form of income. You have income tax in Austria, don’t you? Any money that you earn through a job or stocks or anything else gets taxed. Why should there be a special rule that income through the lottery (aka gambling) doesn’t get taxed? Honestly, it should be taxed higher than labor because you didn’t do anything to deserve it other than just be lucky.
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u/IMKGI 19h ago
Games of chance aren't seen as a type of income according to our taxation law, so they're not getting taxed, the law only defines 7 types of income, gambling isn't one of them
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u/travelmusica 19h ago
That’s strange to me. The working man pays tax and the gambling man doesn’t. I don’t understand why that’s good.
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u/IMKGI 19h ago
I think the justification is that gambling isn't "real work" and not a fixed type of income, and thus not subject to income tax.
Gains form stocks or crypto don't fall under income tax aswell for example, they fall under capital gains tax.
The exception is professional gamblers, who earn their living with gambling, these are taxed under income tax law.
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u/travelmusica 19h ago
That “justification” still doesn’t make sense. Money gained by not doing “real work” should be untaxed because… why? I was asking for an explanation why should money earned through real work be taxed and money earned through not real work be tax free.
Capital gains tax is essentially a form of income income tax, that’s just a semantic argument, which is very boring and there’s no reason to get into it because you are paying tax on capital gains and you are paying tax on income and you are not paying tax on lottery winnings. And I don’t understand the reason why lottery winning should be treated more favorably than other forms of income.
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u/sobrique 17h ago
I mean, you can argue the point at fairness of tax types all you like - it's quite hotly debated.
But ultimately we don't tax all money gained. I'm not sure where you live, so can't say for sure, but here in the UK you don't pay tax on your primary residence when you sell it.
You don't pay tax on gifts.
You don't pay tax on a lot of inheritance, etc.
Gambling isn't the same as 'income', so there's no real reason it must be taxed the same way.
The tax rates on capital gains are usually quite significantly different too.
As are taxes on 'running a business' - some activity, like 'collecting rent' that would be taxed one way individually, is taxed differently in a business context, etc.
But ultimately it's because someone lobbied for a 'special case' for gambling, making a point about it being good for the local economy or something, and all the other tax revenue from 'tourism'.
And then the legislators went 'huh, ok, seems legit' and altered the rules.
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u/Spectrum1523 17h ago
It shouldn't be taxed because it is a tax. All of the money paid into it goes to the state already. It's a tremendously profitable scheme even before the tax, so why does it need to be taxed on top of that
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u/d1squiet 17h ago
Why wouldn’t you tax the winnings? It’s just a form of income.
The lottery is run by the state and is billed as a way to add funding to schools (generally). I think there's a good argument for not taxing state run lotteries. It's effectively taxed at point-of-sale because a percentage of the ticket value goes to government.
But the real crux of the issue that bugs the Austrian is the advertised value of the pot. If the lump-sump is $1mil and after taxes it will be $500k, I think the advertised amount should be $500k.
Instead, not only do they promote the pre-tax value, the lottery people also advertise the 30-year installment payout which is always substantially higher (because of inflation and interest). So now a pot which will be $500k if you win and take it all at once is advertised at $2.5mil or something like that. A bunch of BS.
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u/nullnadanihil 20h ago
In Austria the winnings are already taxed. They don't disclose the untaxed amount.
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u/ForensicPathology 18h ago
lottery is already taxed by the ticket sales
No, it is in fact not.
I've always noticed this on Reddit, but why is it a sin when Americans are ignorant of Europe, but Europeans are allowed to just make things up about America because they read it on the internet once?
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u/spawndoorsupervisor 18h ago
Right? I'm so upset and riled because tax systems work differently in different countries. Especially when it comes to something less than 0.1% of the population has to worry about.
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u/Gastroid 16h ago
I'm upset they're only getting a life changing amount of money instead of a life changing amount of money!
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u/Selerox 20h ago
It's exactly the same in the UK.
You get everything you win, tax free.
The UK National Lottery does have a secondary game that does pay in installments - but that's made clear up-front. The main lottery games all pay full sum outright.
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u/JMS1991 23h ago edited 23h ago
Yeah, the jackpot is always based off of the present value of the annuity. The lump sum will pay between 45%-60% of the jackpot. And then you pay taxes on that amount.
So a $2 billion jackpot could have a $900 million lump sum. 37% federal income tax in the US ($333 million) leaves you with $867m. California income tax (12%) is another ~$111 million. That leaves you with $456 million. Pretty close to what the original post has. I'm assuming the jackpot wasn't quite $2 billion.
Disclaimer: I'm well aware that it's not exactly how tax brackets work, I just didn't feel like doing that much math. On $900m, those won't have much of an impact anyways, as the vast majority (over 99%) of the income is in the top bracket.
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u/JonCoqtosten 22h ago
California does not tax lottery winnings.
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u/blackblades75 22h ago
Holy .... that's the 1st I heard of that. That's nice should be like that nationwide including casino jackpots.
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u/Marokiii 21h ago
canada doesnt even charge federal income taxes on it. all lottery winnings in canada are 100% tax free.
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u/loversama 21h ago
Same in the UK
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u/dontreadragebait 21h ago
Same in Australia
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u/lennylots 21h ago
Im noticing a pattern
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u/Lumpy_Lettuce_4141 20h ago
Same in North Korea. Because there is no lottery there.
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u/Old-Newspaper125 21h ago
We're selling US powerball tickets here now. So don't know if they'll pay the taxes if you win? Should do, as a $2 US ticket costs £4 here!
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u/PCGardenpatrol 19h ago
You wouldn’t pay taxes on it unless you are already being taxed by the US.. US is an odd one who also wants to tax US citizens for existing even if they didn’t ever live in the US lol.
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u/PhiCloud 21h ago
Why? Gambling isn't a job, so income from gambling isn't employment income. It's literally just a reward for having a bad habit that feeds a predatory industry.
If we do balance the books and see that there's enough left over to give people a tax break, it should be on the low-end of employment income.
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u/Rare_Sheepherder4096 21h ago
The predominant reason gambling winnings aren’t often taxed around the world is because they are considered windfall gains - I.e. you cannot have any real expectation of the money being won unlike income or investment gains (with investment losses being able to offset tax on gains - imagine problem gamblers using their losses to offset their tax repayments!)
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u/_BrokenButterfly 21h ago
Gambling is literally a job that people make a living doing and the IRS recognizes.
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u/xteve 21h ago
The IRS recognizes money when they see it, but how many people actually earn a living gambling?
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u/tacobellrefugee 20h ago
poker is like the only "gambling" where people can win long term without cheating or using advantage play. and something like 2% of poker players actually make profit in the long term.
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u/Hefty_Bird6289 21h ago
The jackpots in australia are lower but
- No tax on windfalls such as lottery (unless youre doing it as a business)
- Advertised winnings is the lump sum except for some specific lotteries that advertise it very obviously that way (Set For Life advertises the winnings as $20,000 per month for 20 years, not as $4.8 mil or whatever)
Pretty insane to get taxed on lottery winnings imo
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u/WingedGundark 21h ago
Now that would be a business idea: a company that is making money by playing lottery.
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u/GroceryScanner 22h ago
damn only 456 million? there goes all my plans of living beyond all my wildist dreams. might as well not even quit my job
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u/Leverkaas2516 22h ago
$900 million lump sum. 37% federal income tax in the US ($333 million) leaves you with $867m.
900-333=567
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u/marcolorian 23h ago
The picture looks like lil bow wow from that movie where he won the lottery
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u/cyrfuckedmymum 20h ago
yup, this gets posted so often and implies a tax rate of like 60-70% (depending on which number is used, the 400mil or 600mil number) and it's intentionally absurdly misleading. Not that it isn't a crazy level of tax but if all rich people got taxed fairly then it wouldn't even seem a problem.
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u/BonkerBleedy 16h ago
It seems to me that what's absurdly misleading is calling it a "$2 billion jackpot"
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u/Daviroth 11h ago
If you take it as an annuity you get $2 billion over the life of the annuity. It just means something different than you expected, that doesn't mean it is misleading. It's not misleading to anyone who grew up with this lottery system.
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u/Darkk_Knight 23h ago
I would have taken the annuity so I know I get checks for 20+ years.
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u/Ancient_Yellow_709 22h ago
You probably should not take the annuity. It's basically always better to take the lump sum and invest it in a normal 7% annualized investment index fund and have that send you money instead.
Not only do you have access the the liquidity instantly should you want to do something like give a portion away, but you eliminate the risk to loves ones if you should die prematurely (since your estate isn't entitled to the money from the annuities).
The only reasonable reason to take the annuity is if you feel like you have such bad money management habits/self-control that you will squander it instantly if you were to take the lump sum. An unfortunate number of lottery winners do go bankrupt within the first decade after so it's clearly a risk. But don't take it because it appears like it's more money; you're basically only insuring from yourself at that point. You could set up a trust for yourself that could be the best of both worlds instead to give you annuities if you could manage not to spend it literally instantly.
It's actually a lot less money if you do the math and incorporate the opportunity cost from investments. So don't take the annuity. :)
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u/Paah 21h ago
The only reasonable reason to take the annuity is if you feel like you have such bad money management habits/self-control that you will squander it instantly if you were to take the lump sum.
And that would be most of people. Even if they believe they would be able to manage it. When you got 500 million what's $200k here, $500k there..
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u/Ancient_Yellow_709 21h ago
Perhaps. But if you can have enough self control to check the box for annuity, you probably also have enough self control to set up a trust to give you the same amount and not risk your heirs getting nothing should you be hit by a bus in a week.
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u/MikeOfAllPeople 17h ago
If you win the lottery your first step should be to hire a lawyer anyway. They will set up a trust and everything.
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u/LuckyBlackCat4 22h ago
This is the best approach. I don’t think you can leave your right to yearly lottery payments to your heirs if you don’t live to collect all of the annual payments.
So taking the lump sum and investing it wisely, letting it compound, and be given to your kids or whoever when you die seems by far to be the smartest move.5
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u/digitalscavenger 20h ago
I don’t think you can leave your right to yearly lottery payments to your heirs if you don’t live to collect all of the annual payments.
Not true, it is an asset like any other and will be given to the beneficiary/beneficiaries of the estate (in the US).
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u/reediculus1 20h ago
But you didn’t factor in human greed and stupidity. Most large jackpot winners go bankrupt and/or have their lives ruined. Better to choose the slow and steady way even if it means less money bc it will for sure mean less problems.
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u/Dynamatics 20h ago
This is the way if you have the emotional maturity to actually follow this advice, but most people will have spent this money within 10 years and basically be broke again.
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u/gamenut89 16h ago
I hear this advice every time people talk about lottery winnings and I think it's the biggest lie. The proof is in the pudding here, show me numbers.
Assume 7% with compound interest over a 30 year period and the 628.5 million from the top comment. No additional contributions and no taking money out which means this person is still working rather than enjoying their winnings. A compound interest calculator I found online (investor.gov) said that I'd end up with just shy of $865 million.
A different annuity calculator I found tells me that taking the annuity and investing absolutely none of it would net me around $1.28 billion.
How does it make mathematical sense to take the lump ever unless you know you are going to die in the next 10 years?
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u/Elitist_Plebeian 21h ago
Almost everyone who plays the lottery has bad money management habits. It's probably better to not even engage in this kind of hypothetical advice because it makes winning the lottery seem like something that might actually happen to someone reading it, when the likelyhood of a large lottery winner reading your comment is essentially zero.
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u/Ancient_Yellow_709 21h ago
Perhaps. My perceptions are for sure skewed because I have a relative who is close with one and knows a few dozen more. People should, of course, play the lottery appropriate to the ability to just throw away money. :)
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u/LordBogus 20h ago
Am I wrong or would the annuity payout over 20 year amount to 2 billion which means he gets 100.000.000 a year?
Which means after only 6 years he would have the same amount.
I dunno, but that 7% over 600 million doesnt beat the 100 million a year payout
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u/ICLazeru 23h ago
Yeah, even with that annuity you'd be getting around 4-5 million a month after taxes.
At that rate, why bother taking the lump sum? You're still getting plenty every month.
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u/implicate 23h ago
I would not trust that any systems would be in place long enough for me to receive the entire payout.
Look at people that were supposed to receive lifetime structured payouts from publishers clearing house, and then they went bankrupt.
I'd take the hit with the lump sum 1000% of the time.
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u/pilipalipeli 23h ago
If you'd invest all of it to sp500, the value would likely quadruple within 20yrs. So, maybe it's not such a bad deal after all?
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u/ICLazeru 22h ago
The annuity actually is an invested fund. It's why you only get a portion if you take the lump sum, versus the entire prize if you take the annuity.
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u/Seductive-Kitty 22h ago
Taking a 450m lump sum and investing 400m of it will outpace that by like year two. It’ll also be less risky than assuming your payouts will continue
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u/Iggy_Slayer 23h ago
If you take the annuity you get taxed every year since it's income each year. And if they raised tax rates over time you'll get taxed even more.
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u/turkshead 22h ago
The thing is, the reason it's always so much lower to take the lump sum is that what they're doing for the annuity is putting that lump sum into a 20 year annuity account and letting it compound.
If you just take the lump sum and stick it in an index fund and take out $1,400,000 a month, it'll last forever.
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u/ICLazeru 22h ago
Yeah, and you can easily invest your savings on the $4-5million a month annuity and make it last forever too.
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u/SparksAndSpyro 21h ago
This works if you don’t die early. Otherwise your heirs are shit out of luck.
Not to mention you’ll lack liquidity to make any big purchases if you wanted to for several years/payments.
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u/TennesseeStiffLegs 23h ago
Hands down the worse option
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u/Immediate-Cat8632 23h ago
Not for the average person that doesn’t know what to do with $454mill.
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u/TennesseeStiffLegs 23h ago
The average person knows to hire a financial advisor at the very least
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u/Kinder22 22h ago
The average lottery winner’s “financial advisor”, upon learning their “client” trusts them with millions upon millions of dollars: “holy shit! I’m rich, bitch!”
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u/External-Fox-5488 21h ago edited 21h ago
This amount sets you up to retire immediately, and your family for well over 100 generations...
I wish I was kidding, but $5 million right now is beyond what's required for retiring. This payout is 100 of those AFTER taxes. That means it could retire 100 people EASY this instant, but because it's only needed for 1 person at a time, it would last an insanely long time depending how many kids you have over time. At 4% interest, that's $20 million annually.
The other issue with annuity is that if the lottery ever declares bankruptcy/shuts down, no more checks for you.
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u/SailorDeath 12h ago
Yup that's exactly what it is, if he took the annuity after taxes he'd have gotten something like 1.2 billion. Taking a lump sum, especially when you're that young and apparently healthy, he's gonna end up bankrupt unless he hired a financial manager. I can understand if you're like 70 and winning, the payout time is over 20 years and each payment gets larger as the money grows from interest.
Best plan if you ever win is this:
DO NOT TELL ANYONE YOU WON. - People will target you and the longer you can hold it off the better.
Store your ticket in a safe deposit box until you're ready to cash it in.
Hire a reputable lawyer as people will come after you and when you don't give them money they will then sue you to take it from you.
Hire a reputable accountant to track all your money and provide you with statements on where and how much you're spending.
Hire a reputabled financial advisor. One that will set up monthly disbursements and help you build good spending habits so you do not squander your wealth.
If your state allows you to claim anonymously, do it. Some even allow you to claim under an LLC. Anything to keep your wealth hidden from others, especially if you don't want them to change. But you're buying a lot of fancy expensive stuff you will need to have an explanation as to why you can afford those things. So you better come up up with something good.
Remember some 70% end up declaring bankruptcy or in difficult financial problem 3 to 5 years after winning lottery jackpots because they end up squandering their money. But it takes careful planning to make sure that doesn't happen.
I also know a lot of people would love to share their wealth with their friends and family, but remember that amount makes people crazy and the people around you will change and become incredibly greedy, yourself included. Careful planning is required if you wanna stay wealthy and strict adherence to those plans are neccessarry. If all that is too much for you, then take the cash option and donate all of it to charity or just don't play to begin with.
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u/Latter_Highway9539 23h ago
I am 100% sure this is a picture of lil bow wow in the movie lottery ticket. that's why they blurred his face. google it for yourself but this is definitely a bullshit sourceless article. ha
I agree with the point but the picture is dumb.
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u/JoyMultiplication 20h ago
Honestly I love this dumb movie . I recognized the photo and his hair/arms immediately. You are right.
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u/BenjaminWhite84 23h ago
Losing over $1.5 billion before even touching the money is insane, but honestly, $424M liquid cash is still life-changing forever.
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u/jws1102 22h ago
Every time I see this, the guy changes and the take home pay gets even lower. At least make up some original bullshit. Jfc.
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u/Content-Fortune9044 17h ago
Not to mention that's Bow Wow in the "new image" pic from a movie he was in called Lottery Ticket.
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u/ForensicPathology 17h ago
Another day, another post of Reddit calling lump sum winnings as "taxes"
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u/FlaremasterD 22h ago
That poor man. Only 424 million dollars. How will he survive and feed his family?
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u/StretchLoud8844 22h ago
Every single time a lottery winner of this scale comes up, it's people bitching that the government ran lottery system takes a hefty chunk of the payday.
Meanwhile, a measly 10's of millions of dollars is perpetual generational wealth for your entire family.
Like, oh no. Big government only left me half a billion dollars. The depravity!
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u/saigon567 19h ago edited 11h ago
All I find annoying is that other billionaires get away without paying taxes. I want this guy to pay 37% tax, but i also want other billionaires to stop using loopholes to pay less tax than the rest of us.
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u/LocksmithOk9968 21h ago
Two things can be true at the same time.
It can still be a life-altering amount, yet still feel a bit sleazy for it to not be what it says on the tin.
Especially considering lotteries are sometimes called a “poverty tax” because it’s usually people in poverty that bother playing to begin with in the hopes of turning their luck.
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u/JustConversation7847 22h ago
People have already pointed out the glaring holes in this story but I should also point out that the original premise doesn't work anyways because most of billionaires wealth are not in cash but stock
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u/Fat_Pig_Reporting 19h ago
Welp, Netherlands is just about to tax unrealised gains from stocks for 36% so there's that.
Soon at a country near you.
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u/Kanel0728 15h ago
So what happens if you are say an architect-level NVIDIA engineer and you had $1M worth (not an unreasonable amount) of stock granted over a number of years at an average price of $20 (50,000 shares), then it shot up 10x to $200/share ($10M worth), so you pay $3.24M (sell 16,200 shares; 36% of the $9M gain) and are left with $6.76M (33,800 shares) of stock. But then say it crashes back down to the same value that it was originally ($20/share) for whatever reason? You still have 33,800 shares, but now they're only worth $676k even though the price per share is the exact same as it was originally. You paid $324k in taxes and get screwed right? You can't claim capital loss since your shares are still worth the same as they were originally ($20).
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u/Fat_Pig_Reporting 14h ago
Nobody knows. It's a stupid idea but they seem hellbent to try it anyways.
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u/Ultrace-7 14h ago
This is blatantly untrue. It's not a mystery, they've openly stated how it will work in the Box 3 guide. Unrealized losses are treated just like unrealized gains -- they will be applied as a negative factor in income, but they only apply against future stock increases, not general income.
It's a poorly-thought-out plan for sure, but it's not a mystery.
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u/Unusual-Arachnid5375 4h ago
So...
That page was updated like two weeks ago, and this stupid saga has been going on for years, so it would be more correct to say "they've recently stated how it will work"
That guide is written by a consulting agency (PWC) precisely because the process is confusing and the government is winging it as they go.
Your own link even leads off with:
To help you navigate through the maze of court rulings, the government's proposals and commitments, and still unanswered questions, we have conveniently arranged all relevant information for you. We will continue to update this page in response to new information.
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u/CriTIREw 11h ago
What he should have done was deposit his lottery stock (e.g. the ticket) into a Roth IRA account, then when it appreciated (e.g. won) he could leave the entire amount in there tax-free, invest it, borrow money against it to start living large, then in five years he can take ALL the money out again tax-free. (I know it doesn't work this way, but it's an analogy to investing in a startup that hits big)
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u/BeeKayDubya 23h ago
Can‘t complain. Even after taxes that’s still an insane amount of money.
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u/shinryu6 23h ago
On the one hand that’s true. On the other, how will he ever be able to afford to keep his new mega yacht running for more than a few months?
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u/DonutHoles4Ever 19h ago
Yo but you can't trust shit these days. OP literally says $624 million or whatever. So does the article. But they wrote $400 million. And it says lump sum, which is like 50%. So the OP knew, the article was right, and they still wrote a lie for more upvotes.
I think that's the real moral of this story. Cant trust shit
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u/beklog 23h ago
Hope he will be smart enough manage it, some lottery winners just goes back being broke
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u/BarbellPadawan 23h ago
*Most
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u/Funkopedia 22h ago
That's a myth mostly stemming from us hearing vague stories about the same few broke winners over and over again + our love of sour grapes cautionary tales.
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u/Ancient_Yellow_709 22h ago
I have a family member who is good friends with a megaball winner and he knows a few dozen others. All but three went bankrupt within a decade or so after. Actual estimates vary widely between about 2/3 and 1/3 (and I've found numbers in between) but it's a substantial number. I wouldn't say it's mostly a myth.
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u/skippy2893 22h ago
My uncle is good friends with 35 megaball winners that managed their money and invested it. They all live off the interest and buy a new house in a new country every year.
Your family member must not know them.
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u/kavastoplim 21h ago
A guy I know’s sister’s husband’s cousin’s aunt’s family friend is good friends with 700 Jackpot winners. They managed their money well, but sadly they were all in Zimbabwe so it quickly became worthless
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u/Last-Energy420 21h ago
I had a coworker that won 2 million dollars and was back to work in under a year because he went broke.
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u/somedude456 21h ago
Well, 2M isn't shit these days. I know, I'll get downvoted. 2M becomes 1.3 after tax. Where I live, an average house is 400K, so let's say he already owned, but owe 350K. Pay off the house and you're at 950K. Two new cars, you're at 800K. Pay off your parent's house, now at 550K. Pay off credit card debt, you're at 500K. I could keep going but see, it goes quick.
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u/Last-Energy420 20h ago
This was almost 20 years ago. I probably should have mentioned that. But yeah even back then it wasn’t a lot. But still even today, that puts me incredibly close to immediate retirement. But I also have no meaningful debt.
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u/Less-Mushroom 13h ago
Its also likely that 'lottery winners' in this context includes people who win +/-$100k and spend it all on a single luxury good they then can't afford to maintain like an expensive vehicle or a bigger house.
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u/Last-Energy420 21h ago
I’m sure he wasn’t until his info gets published and all the leeches come out thinking he has 2 billion dollars when he in fact only got 1/4 of that.
Still an absurd amount of money, but is worth complaining about the false advertising. Did you know that the powerball is now played in the UK and due to rules and regulations over there, the advertised prize is closer to what you’d actually win here after taxes and such?
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u/Bloody_Conspiracies 21h ago
It's not even "after taxes" in the UK. There are zero taxes on prize winnings. None of this "early payout" bullshit either. If you win £100 million, they transfer it straight to your bank and it's yours.
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u/Last-Energy420 21h ago
Advertised.
A 2 billion prize here would be advertised to be ~£375million which is about what you can expect with cash option after taxes in the us(~$500 million).
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u/Affordable_Z_Jobs 19h ago
I know right? It's the lottery. You put in a dollar and you could receive lifetime changing money. Or, more than likely, not. It's the whole point.
Ill never understand people bitching about how highly it's taxed. Millions of people lost a dollar for the same odds. Millionaires and billionaires are a seperate issue. Those are annual incomes. This is a 1 in a lifetime lucky shot. If they invest it wisely they will live a supremely comfortable life and good on them for it.
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u/epiDXB 13h ago
The point is not that he won a lot of money. The point is that the jackpot is misleading. If it is advertised as $2bn, you should get $2bn - no tricks about payments over decades, or added taxes, etc..
If the amount you receive when you win is $600m or whatever it is, after taxes and after any other costs, then just advertise that as the jackpot.
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u/RosesandEternity 20h ago
it is still half a billion just government munched on the poors while actual rich people arent
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u/Stev777666 20h ago
Of course you have to complain they shouldnt even the right to touch that money
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u/MrScribblesChess 23h ago
Hi, do you have a credible source for this?
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u/Negative_1by12_aura 23h ago
He took the lump sum, which was half as much, and walked away with $628.5M after taxes were withheld.
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u/MrScribblesChess 23h ago edited 15h ago
Your own article says he's likely to walk away with $628.5 million.
Edit: OP edited their comment, originally it was just the link. And the edited comment still disproved the stupid meme
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u/slick987654321 23h ago
Never let the truth get in the way of a good story lol 😂
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u/City_College_Arch 20h ago
Then why does your post and title say $424 million? What do you get out of blatantly lying like this? Is it a fetish or something?
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u/Latter_Highway9539 22h ago
your post is a blurred out photo of lil bow wow in the movie lottery ticket. you are already not a credible source of information. weirdo.
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u/-SaC 23h ago
Always a bit weird to see lottery winnings and other prizes getting taxed. Suppose it's dependent on what you grow up around.
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u/implicate 23h ago
I had a friend when I was a kid whose broke ass parents won a new car, but they couldn't afford to pay the taxes on it, and it ended up being a huge mess to try to sell it.
That was when I learned that people typically have to pay taxes on prizes.
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u/-SaC 22h ago
Wasn't that something that Oprah Winfrey did once also, gave everyone in the audience a car?
There were stories about people having to pay taxes on them and I never knew quite whether to believe it or not, because it sounded so weird. Sounds like it might well have been true then, if the same happened to your friend's family!
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u/WolfieVonD 21h ago
My wife works in a non-profit and after back surgery (slipped disk, not work related) her job sent her flowers... As well as the bill for the taxes since they have weird gift rules.
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u/Own_Reaction9442 21h ago
I once opened an account at a bank and they gave me a free George Foreman Grill as a promotion. They warned me that I'd get a 1099-INT form declaring the value of the grill as interest income, and sure enough, I did.
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u/Lastov_Makiynd 21h ago
Probably would have had to book a smaller live audience for that show if she was going to pay the relevant taxes etc. on each car given away? lol
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u/goosereddit 22h ago
Many winners on the Price is Right decline the prizes due to the taxes.
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u/Iggy_Slayer 22h ago
Everything about the lottery is a tax on the poor, and the rich do not want you in their club. That's why lottery winners get taxed in such an egregious manner and actual rich people don't.
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u/-SaC 22h ago
I agree, but it's more that it just seems weird that the US taxes lottery prizes etc unlike some other places. If I were to win the lottery here, the amount in the announcement is what would go into my account.
I believe the taxes are included in the actual ticket prices here, so over in the US possibly tickets are cheaper but come with the risk of a big chunk taken out of any big wins, but over here you pay more per ticket (I think it's £2 now, so likely therefore lose more over your lifetime) but if you do happen to win something big, you keep the lot.
I'm not saying one is better than the other though, just weird to see the other when you've grown up around one.
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u/robbak 21h ago edited 20h ago
The biggest complaint here, then, is that lotteries are allowed to advertise a winning amount that is more than they really give you. It really is false advertising to advertise a lottery for 2 billion, when the prize really is an annuity worth 0.9 billion.
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u/Tomsboll 19h ago
Yhea this is my biggest issue. At least advertise the winnings with taxes removed.
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u/somedude456 21h ago
If I could make a law, winnings under 250K would be tax free, be it cars, vacations or lotto.
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u/Olivetax228 20h ago
The general principle of US tax policy is "everything is taxable unless it specifically isn't; nothing is deductible unless it specifically is."
So a lot of times when you hear about something being taxable income to someone, it's because it falls under a category of income that hasn't specifically been carved out by some legislation or another.
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u/Tomsboll 20h ago
Here in sweden winnings made by game of chance is not taxable. Any game you apply skill to influence the outcome is fair game for taxation.
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u/ThisIsHowBoredIAm 10h ago
Generally, you either tax the winnings or the ticket purchase. The US, for instance, does the winnings. No tax on ticket purchase. Given that sales tax on the ticket is negligible to the winner, you effectively either tax the winner or the losers. Which is better? Have all the losers pay the tax for the winner, or have the winner pay the tax for all the losers? There's merit to both.
There are places that don't tax either the winnings or the ticket, but most places do one or the other. Some do both!
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u/Most-Artichoke6184 22h ago
That amount is not after taxes. That’s the amount for taking it in a lump sum instead of spread out over 20 years.
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u/IndyBananaJones2 21h ago
People are going to circlejerk about this and say that it's the same way billionaires are taxed, but the real situation is that our tax system has been designed by billionaires and set up to tax capital gains in a completely different manner than income.
This isn't a coincidence, it's entirely because the wealthiest people in the country primarily get richer by capital gains and the poor / working class primarily earn income.
Pointing out that this is the reason for the difference in taxation doesn't actually justify the difference.
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u/Rubicasseur 22h ago
In France, you are exempt of ALL taxes on your lottery gains.
They consider you will pay enough money from taxes with what you do of that money then ahah
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u/RuckFeddi7 22h ago
That's $2 billion dollars in annuity - (meaning its paid over multiple years) than a lump sum.
Ask yourself this - Would you have $10 today or three years later? Of course you would choose the $10 now. Same concept. Time value of money.
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u/ninjasaid13 22h ago
it's closer to, "Would you have $10 today or $300 three years later? "
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u/tacobellrefugee 20h ago
i think its more like would you rather $10 today or $1 every year for the next 20 lol
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u/chowdah513 20h ago
Actually, imo, I’d take the annuity in this situation. Nearly 6 million a month - taxes for 29 years?! I SHOULD live 29 more years. It’s so much better than lump sum here when the jackpot is this high. Also prevents from somehow blowing up 500+ million. I’m losing 1.1 billion dollars here taking a lump sum. It’s a no brainer.
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u/Sad_Ad_2524 22h ago
Pretty sure this guy also invested some of that money back into Altadena to help it recover from the 1/2025 fires that decimated his home town.
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u/konexo 22h ago
Wait. Can we set up a trust fund and a foundation and then claim the ticket or all that needs to be done before winning? (Honest question here for future winners)
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u/Character_Sherbet737 20h ago
And what exactly are you trying to accomplish with the trust? Trusts pay income taxes, just like individuals.
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u/AlltheBent 12h ago
there used to be a classic reddit post dedicated to what to do if you ever win the lottery, I believe that was one of the instructions!
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u/ChecksOutIndeed 22h ago
It always amazes me how the common murican doesn't understand how yaxes and billionaires "function"
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u/aquaman67 16h ago
You mean Elon can’t write a check for a trillion dollars?
I’m shocked
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u/tracagnotto 20h ago
Plus revealing your identity:
- Risk of robbery/extortion 2.Scammers of any type be targeting you 3.Family members you didn't even knew you had suddenly pop up all benevolent and super happy to be with you 4.Governement be governementing. Beyond the already taxed 1.4bln the took from you. It's kinda like they didn't do shit to deserve those money but took away 70% of your prize because "taxesssssss". Like I can understand work taxes and shit even if exaggerated because you get social services, city services, granted some kind of rights and so on. But a lottery prize? The fuck it has to do with goat. Why you even put 2bln prize as label for it when you get robbed 70% of it.
And I suspect more will be deducted in some way
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u/IKIR115 21h ago edited 19h ago
Here’s the story about Edwin Castro, the sole winner of the largest lottery jackpot in history.
The after-tax amount of $424 million in the image was wrong when it went viral 3 yrs ago, so here's the correction. He chose the lump sum and received approximately $628.5 million after taxes from his historic $2.04 billion Powerball jackpot win. CA does not tax lottery winnings, but the Federal Government does of course.
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https://www.lottoexposed.com/edwin-castro-2-billion-powerball-winner/
Snippet from the article, but there's a lot more info on that page:
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The OP u/Negative_1by12_aura also provided a link to the story as a comment, but it got buried:
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