Winning the lottery is a life-changing moment!
The happiness, the excitement, the emotions, and of course the money, all just doubles up!
A huge lottery win can make or mar your whole life. Because with a great win, comes a financial windfall of the same intensity and financial responsibility that can be too heavy to carry for some.
With this huge sum of money, you can think of buying anything, but what you cannot buy is the way to spend that money, the taxes, and the social responsibility you need to oblige. With every lottery winning, comes lottery taxes and bills which are mandatory to be paid.
Started worrying already!
Don’t fret!
In this article, you’ll get deep insights into how lottery winnings are taxed and how the lottery tax calculator will help you out with major calculations and let you know what amount of lottery win will you receive!
When you win a lottery, the first question that pops your mind is what payout option you should go with - lump-sum or annuity. While lump-sum is the consolidated sum of your lottery win after deducting all the taxes, the annuity option means, a portion of your prize will be paid each year for a period of 20 to 30 years.
Still, confused between the two?
Let’s break it down for you! Many of you believe that the lump-sum amount is lower than the annuity amount in total, but, this is not the case. The lottery operators advertise the “total cash value” of the annuity instead of the “present value” of the annuity. There is no difference between either of the payouts options. To get a clearer picture of it, you can make use of a lottery tax calculator before claiming your winnings, or hire a team of professionals that may help you know the very basic and complex details about the payouts option and the deductions to be done by the lottery.
Going as per the U.S. tax deductions, you have to deal with the Federal Personal Income Tax and Social Security Tax. The Federal tax is a progressive one, whereas a Social Security tax is levied to fund Social Security and comprises taxes applied to workers, their employers, and the self-employed.
State taxes are somewhat similar to Federal taxes but vary with each state since each state manages its taxes differently. There are some states that don’t tax personal income, like Florida, South Dakota, Washington, Texas, Wyoming, Nevada, Alaska, etc. There are some states that feature multiple tax brackets like Carolina, which has 9 tax brackets ranging from 1% on the first $8,544 of taxable income all the way up to 12.3% on $572,981 and above.
Before you get even a penny of your lottery winning the IRS makes some tax deductions that are inevitable.
To calculate the sum of all of the taxes levied on your lottery winnings, you can make use of the lottery tax calculator. It gives you the basic idea of what amount of winnings the government will withhold and what amount you will receive based on the amount of your winning and the state you are hailing from. The Calculator offers you the estimated amount of prize money you will get according to the tax structure of your State and the amount of winnings.
Want to calculate your lottery taxes now? Jump in The Lottery Lab, enter your winning amount, your state, and have an estimated prize value. And if you haven’t picked your winning numbers yet! Don’t worry, try selecting your numbers with us! Who knows you grab a win!
