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Taxes on Powerball Winnings

How to receive jackpot

The Powerball  lottery jackpot starts at 40 million and grows rapidly from drawing to drawing, reaching nine digit and sometimes ten digit numbers. The main prize has no limit, allowing USA Powerball to offer the largest cash prizes in the world, which even exceeded 1 billion. How to receive lottery winnings?

Every player wonders: if you win the Powerball how do you get paid? The jackpot amount can be paid by 30 installments over 29 years if a player does not wish to take all the money at once, the total sum of money is less than the declared prize, since it only includes the money of the prize fund of the current drawing. If you get the prize over $5,000, it is imposed taxes- both federal and additional local taxes.

Payout options of Powerball

When a customer realizes that he is a lucky winner, an obvious question arises: how much money do lottery winners actually get? All the earnings are taxed, including the lottery winnings. In America, there are two main types of taxes, namely: Usually when the amount of the prize is more than 5 thousand dollars according to the US law the tax is 25% as well as additional amounts are charged. They depend on the customer’s annual income when declare taxes.

Additional charges in different states

A player should fee additional taxes according to the place where a lottery ticket was bought. Several states are tax free lottery states, but in other states the winnings are taxable. In the state of Florida, the winnings are taxed by three local taxes from different categories. With a winning amount of 600, taxes are not levied, with amounts ranging from 600.01 to 5000 dollars, 28% of taxes are written off, all winnings above 5000 are subject to a stable commission of 25%. Non-resident participants in the United States have a different tax system based on the legislation of the country of residence. Prizes up to 600 are not subject of tax assessment.

Federal tax. Lotto tax rate is mandatory for payment and is equal to 25 percent for US residents and 30 for foreigners. Can grow to as much as 36%, when it comes to jackpots. Tax of state. Varies from 0% (completely absent) up to 30-35%. Payout rules are determined exclusively by the state authorities.

Taxes for the jackpot amount

To tear down the jackpot in hundreds of millions of dollars, you need to consider the following nuances. First, you can immediately pick up the prize a one-time payment to your account, or receive it by annual payments for 30 years. Secondly, the resulting amount after taxes may be less than the declared amount initially at 20-30 percent. It all depends on which way you got the money. With annual payments, a national tax of 36% is obligatory for payment. Customers also ask: do you have to pay income tax on lottery winnings? If a person who has won takes the whole sum at once, then this charge is added to the tax of the state about 15-20 percent.

Income tax by state

Alabama 2% -5%
Alaska no
Arizona 2.59% -4.54%
Arkansas 0.9% -6.9%
California 1% -13.3%
Colorado 4.63%
Connecticut 3% -6.7%
Delaware 2.2% -6.6%
District of Columbia 4% -8.95%
Florida no
Georgia 1% -6%
Hawaii 1.4% -11%
Idaho 1.6% -7.4%
Illinois 3.75%
Indiana 3.3%
Iowa 0.36% -8.98%
Kansas 2.7% -4.6%
Kentucky 2% -6%
Louisiana 2% -6%
Maine 6.5% -7.95%
Maryland 2% 5.75%
Massachusetts 5.2%
Michigan 4.25%
Minnesota 5.35% -9.85%
Mississippi 3% -5%
Missouri 1.5% -6%
Montana 1% 6.9%
Nebraska 2.46% -6.84%
Nevada no
New Hampshire 5%
New Jersey 1.4% -8.97%
New Mexico 1.7% -4.9%
New York 4% -8.82%
North Carolina 5.75%
North Dakota 1.22% -3.22%
Ohio 0.53% -5.33%
Oklahoma 0.5% -5.25%
Oregon 5% -9.9%
Pennsylvania 3.07%
Rhode Island 3.75% -5.99%
South Carolina 0% -7%
South Dakota no
Tennessee 6%
Texas no
Utah 5%
Vermont 3.55% -8.95%
Virginia 2% -5.75%
Washington no
West Virginia 3% -6.5%
Wisconsin 4% -7.65%
Wyoming no

Taxes calculator on prize winnings

All matters concerning taxes in America are handled by the federal IRS. They have everything on the site- the documents, forms and explanations. The calculator of personal income tax allows you to calculate how many taxes on prize winnings one should pay. Select the corresponding tax rate in calculator of taxes and enter the amount of income, or the amount from which the charge is taken, to know the amount of tax.

For an ordinary citizen it is not so difficult once a year to fill in and application of a tax return on a convenient website with clues where you will be taken on the steps, everything will be explained, and everything is counted and filled in for you. Citizens of the US are required to render a federal tax on all prizes above 5000 even if they buy tickets online at TheLotter, most states also withhold their taxes from the total amount of the prize. In most states, a prize of more than 600 must be accounted for by the tax service as taxable income.

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