You picked, you played, you won and now you’re anxiously watching your bank account for that seven figure payout! You might want to hold off your splurges until the money comes in though because you could be receiving a whole lot less than the advertised jackpot.
Unless you live in one of a few lucky nations, your lottery winnings are taxable, which means handing over as much as two thirds of your prize to the local tax man. Unfortunately, there’s little to be done to avoid deductions – except moving to another country – so here’s a quick run-through to get a better understanding of tax implications for lottery winners.
It’s no secret that how much you win depends on where you live and which lottery you play. Lottery winnings are taxed differently based on which state or country you live in, and how much tax depends on how you choose to receive your payout. But there are ways to maximise your winnings, even with the tax man taking a bite. In the US, lottery winners have the option to receive their winnings in a cash lump sum or through periodic installments. Selecting option B might not give you immediate wealth, but by the time you eventually receive your total winnings (after as many as 30 years!) you’d have paid less taxes than if you chose an upfront payout.
Luckily for some, there are some countries in the world where local lottery winnings are not taxed, emphasis on the local. You might be lucky enough to live in South Africa or Canada where winnings are tax-free, but if your picks prove lucky in the US Powerball draw, for example, Uncle Sam will take a chunk before it reaches your account. When it comes to receiving international payments, the flow of money across borders may also be taxed, regardless if it was a lottery win or not.
As with all things with large price tags, it’s best to seek advice from a trusted legal advisor or reputable local tax professional as soon as you’ve won to avoid disappointment.
Still, a bit of extra cash is better than nothing, even if it is 75% less than you thought you’d win, so make your picks on Super Lotto World today!