So you only get to keep a little over half of that...is that before tax or do you pay tax on that little over half?
Well since this was posted the annuitized jackpot has gone up to $900 million with a cash value of $513 million. If you take the lump sum cash that is $513 M before any taxes. The top Federal income tax rate is now 37% (thank you Mr. President). And yes you are going to pay full freight on that kind of windfall. In addition in most states there will be income taxes. The worst is Oregon with a top tax rate of 9.9%. (California has a top tax rate of 13.5% but incredibly they don’t tax lottery winnings.) If you live in New York City you will be subjected to a triple tax, Federal, State of New York and City of New York. You might want to spend some of that money on Vaseline. On the other end of the scale there are a few states that don’t have any income tax or that exempt lottery winnings as long as you bought the ticket in the state.
Assuming you’re not a greedy SOB and decide to donate some money to charity you will probably qualify for tax deductions. On the other hand if you decide to start writing checks to friends and family, be very careful. There is a nasty thing called the Federal Gift Tax. Basically you can write as many checks to as many people as you want, and as long as they don’t exceed $14,000 per person in a given year, it’s considered a tax free gift. If you go over that amount, even with family, it is subject to the Federal Gift Tax which can be extremely stiff. You definitely will want to hire a good lawyer and tax accountant BEFORE you claim the prize.
Good luck and if you do win... remember your FRiends... :-)