We won  Now what?

$100 Million Lottery Winner – Now How To Get Your Money

We won Now what?

You just won the lottery jackpot  $100,000,000!  Most of us dream of this happening and imagine all the fabulous things we would buy and do.

But first you must decide how to receive the money, no doubt a perplexing decision for many winners.  The rest of us see them on TV gleefully accepting & displaying the “big check” with their smiling advisers looking on.

It should go without saying winning a big sum is an emotional experience with a decision to make soon.  This decision comes down to “Cash Option” or “Annuity” with no in between choice allowed by the lottery. 

The government assesses taxes at the rate of 7.75% Wisconsin state tax and 25% Federal tax  making the total tax 32.75% which is deducted/withheld from your winnings immediately.

 Cash Option – Winner receives about 50% of the advertised jackpot amount.  In our $100 million example that leaves the winner with $50 million to subtract taxes from. The net jackpot after taxes is $33 million; not too bad.                                                            

 Annuity – Wisconsin Megabucks winner receives the full advertised jackpot $100 million in 25 annual installments. In our $100 million example the winner gets $4,000,000 per year minus current taxes, nets $2.7 million per year for 25 years.  Nice yearly paycheck.  

The annuity option pays out twice as much, $67,250,000 after tax, this is the equivalent of earning a guaranteed 8.6% rate of return per year.   

Yet nearly every winner picks the cash option. Unless they are going to spend all the winnings right away; and if that’s what they want to do – I hope they enjoy their moment.  

If on the other hand they want the moment to be larger and last a lot longer; the annuity is the way to go.   Later if there is a change of heart all or part of the annuity’s future annual payments can be sold to investors for lump sums. Savvy investors recognize the value of annuity payments solid investments.  In today’s market enviroment an 8.4% guaranteed rate of return is a very good. 

It is unfortunate some advisers steer their clients away from annuities.  They either do not understand how annuities operate to achieve high returns for clients. Or perhaps the reason is once an annuity is setup there are no ongoing fees or commissions paid to representatives. 

My advice – If you win the big jackpot don’t settle for the one time “small” payout. Take the big payout over time with the annuity option. After a year or so when your emotions settle down. You can think logically and clearly again, you can change your mind and sell all or parts of the annuity payments for that upfront cash.

Tips to Win the $1.3 Billion Powerball posted Jan 10, 2016

2015 and 2016 Federal Income Tax Rate Chart for Individuals

You may ask questions in the comments or contact me privately Tim Barton, ChFC

110 Responses

  1. John

    If you win the lottery in TN, will they give you your winnings in CASH money if you want it like that instead of having it sent to a bank?

  2. Tim — I tried to leave this as a reply … FOUR TIMES. None of them showed up. In any event (assuming this post shows up), your question about Social Security numbers is on my website. Click on my name to visit the site.

  3. nick

    if I took the cash payout and I didn’t want it in a bank is there a way to get it in cash or put it in something that has easier access instead of having a bank only letting you pull out a certain amount? Also if I pick the annuity and the economy crashes is there a definite certainty that you will still get your payout every year?

    1. The advice on Federal tax is incorrect. The 25% amount is “only” a mandatory withholding tax required by the I.R.S. In virtually all cases, you’ll owe more money to the I.R.S. For example, if you’re single, the current tax rate is 39.6% … not 25%.

  4. Tim in Illinois if I won the power ball or mega game would it be my right not to let the public know my identity. And if Illinois say I must be recognized then should I get an attorney?

    1. The lotteries disclose winners as a means of promoting the lottery. A winner has not choice and an attorney can’t change that. This is why some winners go into hiding.

      1. Tim – Actually, there is a way to achieve anonymity – assuming you live in a state where photo shoots or press conferences aren’t required as a condition of redemption. As soon as a person finds out they’ve won, they should file for a legal name change. You have at least 180 days to redeem your ticket and the name change process usually takes under 90 days. Since only you know you’re a winner, no one would have any idea why you’re changing your name. After approved, redeem the ticket under your new legal name (lump sum) and file a “notice to vacate” on the name change order – reclaiming your old name.

        1. Interesting idea. What about your Social Security number? No matter what we do with our names the SS number stays with us it is truly an individual I.D. number.

        2. After doing some research it does not appear changing one’s name will help. In many states including Wisconsin law requires names be published in the newspapers. Which defeats the purpose of anonymity. Additionally, according to attorneys I’ve contacted: in all states – a name cannot be changed to avoid any legal requirements or to aid in the commission of fraud.

  5. David Schopp

    I’m from Illinois and my daughter lives in Minn. If she visits me and buys a Powerball ticket here and goes home. She finds out she has won. Does she get the money, or does she get an IOU from the state of Illinois?

  6. Jennifer

    After taking your winning ticket, just say a 250,000,000 dollar ticket,do they give you anything upfront or do you leave empty handed ?

  7. shirley

    at 64 if i win the lottery, wouldn’t a cash payout be the best. have 1 brother, no kid, no spouse.shoud i just spit it with him to prevent gift tax. if i want to leave some to charity in a way that they get annual payout how do i do that.thanks good luck to al

  8. ferrellj1

    I was informed by Kevin Baker 855-599 1955 that had won publishing house sweepstakes. He stated it was not a scam. I mailed him one thousand dollars. I also mailed the courier $600.00 for insurance. I believed them. I want to know if this was a scam. The courier Jason Thomas 702-830-9823.

    1. Sadly this is a scam. If you are the winner of anything there should be NO fees what so ever. AARP wrote about these scams here. You should contact your state’s law enforcement authorities.

  9. john

    HiTim,
    Assume I have a lottery win with several partners. each of them submitting their own claim forms for their portion. We decide want to create an irreversible 501 charity account. Is it possible? If so will that account alleviate the tax burden from the other partners for its designed portion? Would we treat that account like a partner and submit a claim form in the name of that account ? Thank you

  10. john

    Hi tim,
    if I have a lottery win with several partners ( all submitting their own claim form for their share) we decide we want to give 10% to charity. Can we create a irreversible 501 charity account? Would that account alleviate the tax burden for that designated portion? Based on a previous answer i assume that charity account would submit it’s own form to claim it’s 10%? Thank you

  11. Rix

    do they deposit it directly to your bank account if you choose annuity or do they just give you a check?
    And what if you move to other countries?

  12. John J

    I live in Ca. I am sitting on a winning ticket of a nice amount. When I decide to claim it, Do i qualify for any upfront money or do I have to wait the 6 to 8 weeks and walk out of that office broke?

  13. Joe

    I would take the lump sum and invest:

    20% in actual gold and silver, kept in 10 different state side banks, in safety deposit boxes.

    20% in Swiss or Cayman Bank accounts. (with no internet access)

    10% in triple tax free municipal bonds.

    20% in realty (rural, raw land, drill for spring water, and sell it, another 10% business investment for that).

    spend and give out the rest. Praise the Lord…

    1. Aida

      As I was reading your post, I said to myself…now here’s a guy who knows what he’s talking about. Then I noticed you wrote on my Birthday…humm, it’s a sign. That when I win the lottery, real soon, this wk. you will advice me, maybe.

  14. Deborah

    If I win my dreams has always been to donate some of the money to the poor hungry people, and also help the poor animals that has been abuse, and donate to my church St.Anne. Then I would paid off all my debts, and also pay off my family debits too. So all they would have to paid is there normal tax, utility, and grocery. Then I would take a vacation for a whole month. I pray to God every day and may a promise to my self that this is what I would do, specially for the hungry poor people.

    1. Aida

      Me too, I am with you all the way. Wouldn’t it be awesome to give like that…I would get a bigger kick out of giving than anything else.

      Praise God!

  15. Tom Watts

    You are ignoring the likelyhood that the payout by the twenty year mark probably won’t buy a loaf of bread.

  16. Shannon

    Hi
    Thanks
    Good advice
    So, lets say you win and you have certificate and other negotiable instruments
    Do you file estimated taxes first or go to CU or bank first ?
    Thanks

  17. Bruce Evans

    I would take the lump sum and invest
    05% Money Market accounts
    02% Money Market Funds
    50% CDARS (Buy CD’s with different Maturities 3 ,6, 12 months and 5 years)
    10% 5 year Treasury Notes, 10 year Treasury Bonds, 5 year TIPS, or 10 year TIPS.)
    10% Short term treasury bills
    10% placed into short-term bonds
    05% Interest-bearing checking
    05% Savings accounts

  18. john

    Do you call the lottery and tell them you won or just show up and say I won. Do they give you a check right there and you take it to the bank for you to decide what to do with it? Can you put 10 million in the bank and withdraw it all at one time without paying a penalty?

  19. Michael Hester

    Annuities are fine. What happens if the government or payout agency goes bankrupt or changes it mind and stops the annual payout? What happens upon my death?

  20. Cash payout vs. Annuities. Wouldn’t the decision also rest on whatever your goals for the money are? For example, I would want to give a cash prize to my sisters and my mother and also establish trusts for my chilren, nieces and nephews. So for me I would think the cash payout would be the way to go since i’m shelling out a lump some of money up front. With the annuity, I’m bound by a “budget” of how much I can invest, gift and spend…

  21. Trinity

    What if in the past I had medicaid and now no longer have it. How much of that will be taken away in addition to the regular government taxes? How many years does the government go back to collect or do they get the entire thing?

    1. IN NYC they can go back as far as five years to collect. They take back what was paid out during that time collecting Public Assistance (food stamps/medicaid billing).

  22. Johnel

    Hi Mr. Barton,

    I was wondering the same thing as the previous person asked, after winning a large jackpot, do they directly deposit the check in my account or do they give me a check directly? Also, if they give me a large check, could I just go and deposit such a large amount right away after I have paid all my attorney fees. What would be the process for making a deposit of a large size; let’s say 28 million dollars? Thanks Mr. Barton, your advice is priceless :-)

  23. T

    Hi I was wondering, after winning a large jackpot, do they directly deposit the check in my account or do the give me my check directly?

  24. Mega Millions Winner 2014

    I liked your article. I have been thinking about which option to choose and was heavily decided on the annuity option even though my husband was desiring the cash payout, but your article helped solidify my decision to do the annuity.

    1. Aida

      Lucky you – congrats…Can I get an update on how things turned out and how you feel you won please. I feeling sure that I will win very soon, did you have those feelings too? And how did you finally invest? I want to be ready. I think that if I won big millions I would go the annuity route, and if I won say only one or 2 millions I would get lump sum. I worry about the government going down and what happens to annuity payments….did you get any help with this issue? Well, thanks if you are able to respond…if not, enjoy and God Bless you!

  25. Derrick

    How do I include siblings in jackpot and not have to pay gift tax? We have all agreed to buy individual tickets and share the winnings. Do we set up some sort of trust, LLC, etc.? Trying to avoid the additional 40% gift tax once $5 Million lifetime limit is reached.

    1. Go as a group to claim your winnings. Let them know you all pooled your funds to buy the winning ticket. The lottery will pay the winnings directly to each person for their share. They will then take care of their own taxes. There are no gift taxes due in this scenario.

  26. Nick

    Here’s my question. So you hit the lotto and take the cash option. After the initial taxes are withheld in my case 25% to the Feds and 3% to the State of NJ. Can I invest a large portion of the money to prevent paying a tone of money at the end of the year in income tax.. Ruff figures for you. 14,100,000 cash hit with the initial 28% leaves a check for 10,152,000.. Can you invest say 8,000,000 in some type of annuity/dividend type investment maybe something were you can’t touch the money for a specified term.. and only pay income taxes on the interest and the remaining 2,152,000 that you initially took and used as income and put in accounts that are readily accessible.

    1. Keep in mind the winnings will push you into the highest federal & state tax brackets.
      Under current tax law interest earnings from a nonqualified annuity are not taxed until withdrawn. Whatever amount is withdrawn is considered interest first for tax purposes. If the annuityowner is under 59 1/2 the interest will have a 10% penalty tax assessed.
      You could take your $8M put it into this annuity for a term of your choosing. To lessen taxation you could then setup an income stream from the annuity. Part of the income would be principal and part interest each month. Only the interest would be taxable at ordinary income rates and by taking any income stream you avoid the 10% penalty tax if you are under 59 1/2 at time of withdrawals.

  27. Alvis

    Stop paying federal tax on private non-federal income and keep your hard earned income which is not income as defined by the United States Supreme Court. To pay otherwise causes you to commit a crime, namely perjury. Knowledge is power!

  28. Patrick Williams

    Thanks for all the information! So the current federal capital gains rate is 39.6%? What will Wisconsin’s taxes be (currently)? Unfortunately, I haven’t won (yet) but would like to know what’s happening if I do!

  29. Karen today

    I learned by living in Texas for 7 years that although they have no income tax, their property taxes were sky high.

  30. Tywin

    In the event of winning and you opt for the lumpsum, after deducting Uncle Sam’s 35% share, will there be any further taxes applicable? In other words, will there be recurring taxes? I find it unclear per other articles I have read as they have mentioned charity as a means to reduce taxable incomes. Please and thanks for future responses.

    1. By taking a lump sum a winner is paying all taxes immediately. There will be no further taxes due on those funds. If any interest or investment income is generated in the future that money will be subject to taxation.
      2013 federal tax rate 39.6% and don’t forget state income taxes, depending on your state those will be between 5-13%. In a high tax state your lump sum would be reduced by 54% leaving you with 46% of your winnings.
      If you win my advice: take the payments instead of the lump sum and consider moving to one of the few states with no income taxes.

      1. Nick

        Here’s my question. So you hit the lotto and take the cash option. After the initial taxes are withheld in my case 25% to the Feds and 3% to the State of NJ. Can I invest a large portion of the money to prevent paying a tone of money at the end of the year in income tax.. Ruff figures for you. 14,100,000 cash hit with the initial 28% leaves a check for 10,152,000.. Can you invest say 8,000,000 in some type of annuity/dividend type investment maybe something were you can’t touch the money for a specified term.. and only pay income taxes on the interest and the remaining 2,152,000 that you initially took and used as income and put in accounts that are readily accessible.

        – See more at: http://retire.areavoices.com/2012/04/17/100-million-lottery-winner-now-how-to-get-your-money/#comment-115570

        1. Keep in mind the winnings will push you into the highest federal tax bracket.
          Under current tax law interest earnings from a nonqualified annuity are not taxed until withdrawn. Whatever is withdrawn is considered interest first for tax purposes. If the annuity owners is under 59 1/2 the interest will have a 10% penalty tax assessed. You could take your $8M put it into this annuity for a term of your choosing. To lessen taxation you could then setup an income stream from the annuity. Part of the income would be principal and part interest each month. Only the interest would be taxable at ordinary income rates and by taking any income stream you avoid the 10% penalty tax if you are under 59 1/2 at time of withdrawals.

  31. Greg

    Even though I don’t live in Wisconsin I thought you gave excellent advice.

    I play the occasional scratcher game here in California and only play games with annuity payouts as an option, because my thought process pretty much parallels yours.

    If this is indicative of the advice you give your clients, they are lucky to have you as their financial consultant.

    Just wanted to share my opinion with you.

  32. a tv program on lottery winners featured a female financial advisor who suggested in order to keep a winners identity anonymous to claim the prize using a blind trust.
    Any thoughts on that? Mark

    1. Lotteries do not usually allow a winner to stay anonymous. One of the conditions of playing the lotto is winners can be publically used to promote the lottery in order to get more future players. Most lottery rules forbid payments to trusts. The winner must take receipt of money, pay taxes and then write a check a trust.
      Keep in mind planners are trained to keep themselves and their firms involved to generate fees.

  33. Alvis Jenkins

    Lottery prize money is NOT INCOME!!!!!! If you allow a lottery to withhold federal tax on your winnings, then you are doing so as a ignorant citizen of the tax law.
    Sign the lottery’s required tax withholding form with an addition to your signature, John Handcock “Signed under duress in order to get paid”. This will give you ability to sue in “State” court, where the IRS has no jurisdiction.

    1. Fact-Checker

      Here’s your problem. IRS considers lottery payouts to be “gambling winnings” and the law provides for them to require 25% withholding on gambling winnings. (Go read IRS Publication 505 if you don’t believe me.)

      Sure, you can sue the lottery commission in state court, where the IRS has no jurisdiction, but you’ll lose because the commission will rightfully claim they were obeying federal law in requiring the withholdings.

      And you’ll end up paying not only for your attorney, but theirs.

      You, sir, are the ignorant one.

      1. Alvis

        No, you are the ignorant one because you don’t know federal law regarding withholding, for if you did, you would have quoted the applicable law requiring federal withholding of tax on the lottery prize. You are the ignorant one as you have no doubt not read subtitle C of 26 U.S.C., where section 3402(q) is cited about extension of withholding to certain gambling winnings. Subtitle C concerns employment of federal workers and a employee is defined at section 3401(c) as that of federal employment. Since the lottery is not a employer to the winner of a prize, there can be no lawful authority to withhold as that makes the lottery as an federal impostor withholding agent. Title 4 U.S.C. section 72 limits federal jurisdiction within the Union states. The Supreme Court decision of federal jurisdiction is settled in “Bailey v. Drexel Furniture” which proves that the Federal Government has no jurisdiction over Union state sovereignty. Furthermore, subtitle A, the subtitle of 26 U.S.C. concerning income tax has no provision for making anyone liable for the tax.
        Now, you should study the law and refute what I have quoted, if you can!

  34. Romel Oku

    Tim if I win 25 million dollars from the lottery how much will I have after the government has took some for taxes ?

  35. Le

    Hi Tim,

    A question that I cannot get a specific answer too, HELP !!!!!! ok.. If I was holding the winning jackpot ticket for $10 million dollars, and I ask a friend to collect it for me so that I may remain discrete, we go to lawyers and my friend signs that she agrees…do she get the check in the mail at her house (question 1) or.. can she get the check by direct deposit (question 2) if by direct deposit can she give them my account number or does her name have to be on an account to get it deposited ( question 3) or can she use another address to have the check mailed too or will they mail it to the address on her license picture ID (question 3) or can she have the check sent directly to the lawyers office (question 4). I am just wondering how I can do this. Also if the taxes are paid in her name in Philadelphia pa, when she turns all the money over to me , will I have to pay all the same taxes again if she lists the money as a gift to me ( question 5)… these are all the questions I need help with before I do anything so that I know if I should collect my own winnings but I really have a trusted friend that will sign papers to agree to this but I am unsure how the check is handed out ..let’s base all these questions on taking the lump sum… Thank you for answering all the questions

  36. J

    Tim Barton, i live in CA. I heard when you go in and claim your winnings they give you a small amount upfront while you wait the 6 to 8 weeks. Is that true?

  37. cherylsplace

    Ive been poor all of my life and snubbed by people looking down on me and my 8 kids. We didn’t seem to fit in, were made fun of because of our little run down house and our clothes that were given to us. My husband was a drunk and abandoned us and never came back., I’m in a wheelchair and cant walk, but I loved my kids so I couldn’t give up. Im getting a free divorce now in Texas because of my low income, so when I win the lottery, him and all the rest of the gossiper’s wont get nothing! Amen!

  38. Suziesuzie

    If I won, I would take it ALL in CASH and put it in numerous safety deposit boxes so the banks couldn’t make one penny on my money. Then I would set up something whereby I could make loans to others at very, very, low interest rates. Bypass the Federal Reserve, etc.

  39. Vladimir Abretta

    When my family wins The Big One, I would initially take the annuity option because the winnings will be SAFE in the lottery commission’s “bank” without needing FDIC insurance, LOL !! But after a couple of years, I may seek out some commercial-industrial real estate rental properties and cashout my lottery annuity for a discount, pay the gains taxes and buy those “hard assets”. I’m very concerned the US will soon face hyper inflation where the same cash buys fewer goods. Although I may be trading tit for tat and more management stress, I prefer to control my own net worth and have NEVER imagined retiring. Thanks for your advice Tim, it’s nice to read alternate perspectives, Thumbs Up!

  40. James T. Cook

    My question is a little different. Everywhere I read, I am told to get a team of financial advisors, should I win the lottery. I have heard countless horror stories of F.A.’s stealing money from clients. Is it possible to hire a financial advisor and only get advice without them ever actually seeing (as long as I pay them ) , the money? Second, is there a place to actually put your money and keep it safe? I’m not worried about making money off the interest, I would just want a place to keep the money so, I could think about how to invest and who to trust. Is there a place to store the money and still get it insured without creating a 100,000 bank accounts, that are insured? Lastly, as there is so much identity theft going on these days, will banks allow a person to keep accounts that are not accessible to the internet? This would seem to cut down on hackers stealing money. It would be nice to go to a bank and with proper I.D., tell them to move X amount of money from your non internet account, to your internet account. I know this is pie in the sky but, I would like to be able to just keep my money sonewhere, out of harms way until, I figured things out. Is that possible?

    1. Never ever let anyone take control of your money. Make sure you always have final approval for any investment or transfers.
      There are F.A.s who work as fee based consultants only and do no investing. They will usually recommend someone to do that for you and many times they receive additional compensation for the referral. Make sure there is a clear understanding of all this on the front side going in.

      It is better to have a team that includes:
      CPA who will give specific tax advise, a good CPA does not give investment advice if they do find a new CPA.
      An attorney for the preparation of any required legal documents, a good attorney does not give investment advice if they do find a new attorney.
      A stockbroker for advice on equity investments.
      An insurance based financial consultant who will help transfer the risk from you to an insurance company and work with your attorney on setting up trusts, estate plan and income flow.
      None of the above should have any of your money in any of their accounts, all accounts will be in your name and your spouse’s if applicable.

      If you select the annuity payments as described in my post not only will your money be 100% safe you will net more money and pay all of those advisors a lot less. Which may be why so many advisors- advise a winner to take the lump sum.

      Because annuity payments are safe, reliable and valuable there are investor groups who buy annuity payments. So if you need more money in the future you could sell part or all of your future annuity payments for a lump sum. Usually these private investor groups will pay more than what a winner would get from the lottery lump sum.

  41. ada

    some one i no won 1 million dollars and took cash option he ended up with 468,000 that doesnt sound right to me .they took over hale for state and federal taxes

  42. Alvis Jenkins

    Here’s what I will do if I ever win a mega million dollar lottery prize. I will be the first ever person to sue the lottery for unlawful federal income tax withholding. If you know the law, then you know I will prevail in “State” court. Why? Many reasons under current law. Notably because for Federal tax purposes, “Income” is a legal term. Does anyone out there know what income is of which has been defined by the US Supreme Court? If you have no income, then there can be no tax owed. All Federal tax forms are voluntarily submitted. That’s right, you give permission to have the tax withheld when you sign the form containing the jurat “Under penalties of perjury”. If the lottery withholds the tax on the full amount of the prize you won without your consent, they can be sued for extortion and conversion of funds. If the lottery tells you that you cannot receive your prize money unless you sign the tax form, then sign it but include the words next to your signature, “Signed under duress”. This allows you to file suit against the lottery. Why does the lottery state to you that the IRS requires them to withhold Federal income tax? Supposedly because the Lottery has been told by the IRS that if the tax is not collected, the prize winner may try to avoid the tax and the IRS would end up empty handed. It’s apparent, you, the prize winner cannot be trusted in paying any tax you are liable for. Did I say any tax you might be liable for? Are you liable for subtitle A, Title 26 taxes that are only lawfully paid by Federal employees? Lawfully paid by Federal employees only? Subtitle C, Title 26, specifically provides for Federal employees to pay the tax when they make a voluntary agreement with the employer by signing a W-4 tax form. Hey, wait a minute! A W-4 tax form, isn’t that the form most people of the several states file with their employer to have the Federal income tax withheld on their wages? Absolutely, but there is a problem with these people that pay Federal income tax on non-federal income. They commit perjury, because they are claiming that they have Federal income, (a corporate gain or profit) earned by Federal employment. So, the lotteries in all of the 43 current states are committing fraud against the big prize winners. What a shame that people will hand over to the IRS such large sums of federal reserve notes called dollars, when the IRS does nothing to deserve the cash! Just remember, if you know the tax law, you can sue the lottery for withholding tax without your consent, and you can sue for the amount withheld and other damages you might want to include. I can bet you that the lotteries of the several state governments will wake up to the truth if such a law suit ever happens, and the public will see the end of unlawful Federal income tax on citizens of the private sector that have no Federal occupation. Gee, I hope I’m the only winner of the powerball tonight!!

    1. Jason

      It does seem unfair to withhold the taxes right away as its taking capital away from someone before the tax year is at an end…they could have bought some shares/etc and had a return on that money before their taxes were due, to take it immediately is to force money that is not theirs away from you.

      You have to pay taxes by the end of the tax year, hence the drop in share prices just prior to new year, this is like taking your mortgage payment for your house one year up front, it would not be allowed under law, yet they can do that with a lottery win?

    2. What about Publisher Clearing House, do you have to choose cash or annuity? And do they force you to pay taxes that by law you should not have to pay. Should I sign (Signed under duress) on that check and form as well?

      1. Some prizes through Publisher’s Clearing House offer annuity payments and as you receive these payments taxes both Federal and State are due on normal tax payment deadlines. Prize winnings are consider income. Even if you win a material object like a car or house you must pay taxes on the win.

    3. Fact-Checker

      Boy, are you wrong. That argument would never hold up in court.

      Read my response to your later post.

    4. Nancy Gale

      I have always wondered how the Gov’t got by stealing lottery money! Thanks for clearing this up for me!!

  43. Juice

    One More Question Tim If More Than 1 person wins the lottery. & it’s 100 million Are the winnings Split amongst the other winners? Thus Reducing the payout To Each Person? Or Is Each Individual person Entitled to $100 million

  44. Juice

    If I Spent over 100 dollars on lottery tickets Before I Recieve my big winnings Can i Use those same lottery tickets To Alieveate Some Of the Tax Deductions on my Win?

  45. John Martine

    I am 48, if I win don’t I have to live to 73 to collect all the winnings? I am under this impression that Illinois doesn’t allow the winnings to be left to someone else in case of death.If I get hit by a car at 64, my heirs lose a decent chunk of change.

    1. John,
      If you were to die before you have received all of your annuity payments from the Illinois Lottery your heir or your estate would receive any remaining payments or depending on the prize could take the remaining amount as a lump sum. You do need to prepare a will or trust to designate your heirs.
      It is a common misconception that annuity payments are only good during one’s lifetime.
      Here is a link to Illinois Lottery Winners’ Handbook Page 4 & 5 Estate Planning and Forms describes the process.
      Are you in the enviable position of having won?

    1. dynecia blankenship

      I wish I could win some money so I can take care of my mothers family building taxes, bills, heating in the building.

  46. Peter Venable

    If I choose the annuity payments, and I passed away before receiving full winnings, would my spouse be elgible to collect the rest?”

    1. In nearly all annuity payment plans your spouse or any other person you list as beneficiary will recieve the remaining payments. You could also pick your favorite charity.

        1. dennis bartle

          if you take the annuity option, then move to california or florida, would you only pay your current states taxes on the first payment?

          hawaii has a 11% state tax, and since they dont have the lottery, its kind of a rip off that they would get so much money for nothing.

    1. Gigi

      If I choose to receive payments weekly through PCH, that would be best, right?
      And what would happened if I died, woulld my family still be able to receive the money?

      1. Usually receiving the annuity payments rather than the lump sum payment is better. Annuity payments from lotteries and prize drawings are set to payout for a specified number of years so if you were to die your family or other named beneficiaries would receive the balance of your payments.

        1. dennis bartle

          if you take the annuity option, then move to california or florida, would you only pay your current states taxes on the first payment?

          or would you always have to pay your Hawaii states tax, even if you moved that first year to CA or FL, because you were a resident in Hawaii when you won, and have to pay the next 29 years Hawaii state tax, even though you no longer live there?

        2. dennis bartle

          Hi,
          let me try to rephrase the question again, because the answer both times was ambiguous.

          JAN 1 – i live in Hawaii, and win the California Lottery.
          JAN 8 – before i cash the ticket, i move to California and become a resident.

          JUNE 1 – because i have 6 months to cash ticket, i live in CA for 6 months, then cash ticket.

          JUNE 1 – i take the annuity option, for the next 30 years, i stay a CA resident.

          Years 2015 – 2045 – do i pay each year state taxes to Hawaii…even though i left the a week after…… my numbers came up?

          Do i pay Hawaii state taxes every year, even though i DO NOT live there? Because the ticket was ‘earned’ in 2015?

          1. dennis bartle

            FROM LAST SENTENCE…..

            Because the ticket was ‘earned in Hawaii’ in 2015?

            But not living there for the next 30 years.

        3. dennis bartle

          Hi,
          let me try to rephrase the question.

          JAN 1 – i live in Hawaii, and win the California Lottery.

          JAN 8 – before i cash the ticket, i move to California and become a resident, getting drivers license, po box, residence.

          JUNE 1 – because i have 6 months to cash ticket, i live in CA for 6 months, then cash ticket.

          JUNE 1 – i take the annuity option, for the next 30 years, i stay a CA resident.

          Years 2015 – 2045 – do i pay each year state taxes to Hawaii…even though i left the a week after…… my numbers came up?

          Do i pay Hawaii state taxes every year, even though i DO NOT live there? Because the ticket was ‘earned income in Hawaii’ in 2015?

          1. dennis bartle

            Hi,
            please clarify your answer, again, it could go both ways.

            hawaii taxes every year or califorinia taxes every year?

            after ticket/money was won while physically in hawaii.

          2. dennis bartle

            in other words,
            i won the money while physically in hawaii.
            but then i moved before i cashed ticket.
            so i do not have to pay hawaii taxes on it?
            because i moved before i cashed ticket?

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