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re: The eternal Powerball question: lump sum vs installment plan?
Posted on 1/7/16 at 8:13 am to Peazey
Posted on 1/7/16 at 8:13 am to Peazey
quote:
Do you still have to pay the gift tax if you just pay a huge bill for someone? Like say I paid off a family member's student loans that went to law school. Does that still fall under that?
i think they'd have to pay income tax on that amount
1
Posted on 1/7/16 at 8:13 am to EyeoftheEldrick12
GMA said to take the 30 year payout. They said the difference and it was a ton but I can't remember the specifics.
Posted on 1/7/16 at 8:13 am to tiger91
quote:
GMA said to take the 30 year payout
Oh, OK. If GMA says so.
Posted on 1/7/16 at 8:14 am to SlowFlowPro
quote:
my biggest question is how and how much i would give money away to friends, families, and charities
None, lots, depends on the charity. I'd like to buy undeveloped land in endangered areas and leave them in a trust.
Posted on 1/7/16 at 8:14 am to LSUSUPERSTAR
Actually when power ball gets this high I.e 650 million annuity I'd take the 30 payments of 21.6 million over 30
Posted on 1/7/16 at 8:14 am to tiger91
quote:
GMA said to take the 30 year payout.
seems like age would have to be a factor.
i'm old, doubt i'll be around in 20-30 years.
Posted on 1/7/16 at 8:15 am to MorbidTheClown
On this large of an amount annuity easily. Set up an LLC and pay family members through it.
Posted on 1/7/16 at 8:15 am to ThatMakesSense
I'm just offering what I heard as others are offering their opinion.
Posted on 1/7/16 at 8:15 am to L S Usetheforce
Basically I'm getting guaranteed Brees money for 30 years vs a 1 time 220 million
Posted on 1/7/16 at 8:16 am to SlowFlowPro
quote:
my biggest question is how and how much i would give money away to friends, families, and charities
The best way to do that is when you go to claim the money. Just say you were a lotto club and everyone gets a certain percentage or amount. You can only gift a person $14k per year to a max of 5.45 million without having to pay taxes. So if you give someone $20k in a year you have to pay a 40% tax on everything over $14k. If you exceed the 5.45 million everything over is taxed at 40%.
If you did say you were an investment club and you were getting 200 million and then dividing the remaining as you see fit. The people you include will have to pay the taxes at the yearly rate schedule and you won't have to pay 40% on everything above the 5.45 mill.
If a person would do this I would still have legal documents signed and notified before the claim. If someone decides they are not happy at the last moment with their cut they could sue and tie the payments up for years.
Posted on 1/7/16 at 8:17 am to Cosmo
Technically the value of money over time is the main reason to take lump. However, I would be good with either if I won
Posted on 1/7/16 at 8:18 am to Cosmo
If I won, I'd wait until the very last day that I was legally able to claim the lottery prize.
Keep America on pins and needles for a year.
Keep America on pins and needles for a year.
This post was edited on 1/7/16 at 8:19 am
Posted on 1/7/16 at 8:20 am to Cosmo
Lump sum. Applebee's franchise fees are like $9 million and I wouldn't have enough money left over to buy enough big horse Polo shirts
Posted on 1/7/16 at 8:20 am to ThatMakesSense
I would be too freaked out about something happening to the ticket.
Posted on 1/7/16 at 8:21 am to Happygilmore
quote:
you know if you are receiving 500 million over 20-30 years you are getting more than 466,950 every year right?
It's 30 years and the payments are not the same every year.
If you won 675 million - the first year you would receive approximately $10 million dollars - the 30th year you would receive around $41 million.
Posted on 1/7/16 at 8:22 am to LSUEEAlum
quote:
Lump sum. I would live off the interest I make every year. Just 3% interest per year and you get 6.5 million assuming you get about 215 million after taxes. If you can't live off of 6.5 million a year you are an idiot
You do realize that if you take the lump sum of a 400 million dollar lottery that the lump sum is considerably less and then you pay the 40% in income taxes, right? So your lump would be more like 275 million then 40% taken from that.
It's also easy to say, "I'll invest it and live off of 5% growth, what idiot can't do that?" The problem is it's not like a salary where that's all that's available to you for the year. That 100 million you've invested will be calling to you suggesting that you don't really have to limit yourself to a paltry 5 million per year. Most people are not disciplined enough to resist.
Posted on 1/7/16 at 8:22 am to Cosmo
Lump sum. No doubt. At least then if I die I can give it to mi familia. Installments don't continue after death.
Posted on 1/7/16 at 8:23 am to Jake88
quote:
Most of the idiots who win the powerball should do the installments. They are usually genetically incapable of dealing with that sudden wealth and end up in the shitter again after ten years.
Which means they aren't any worse off than they were before they hit it, plus they had a shitload of fun along the way.
Posted on 1/7/16 at 8:24 am to Cosmo
Because I don't trust the stability of any business such to do with gambling, I would take the lump sum. The only other factor is that at 600+ million, you would get Drew Brees money for 20 years. I'm 30. That would be a nice career to retire at 50
Posted on 1/7/16 at 8:26 am to Happygilmore
quote:
you know if you are receiving 500 million over 20-30 years you are getting more than 466,950 every year right?
Yes you will definitely receive much more that 466,950.
Lump sum you receive 413.1 million and pay 39.6% in taxes on everything above 466,950.
Installments you pay 39.6% on everything above 466,950 each year.
So you only pay 10% for the first 18,550 - 15% up to 75,300 - 25% above 75,300 up to 151,900, etc. So over time you pay much less taxes with installments than you do with lump sum.
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