Taxes On Lottery Winnings

Written by James Lyons
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The taxes on lottery winnings make the lottery look a little less attractive. Many people are astonished when they discover that lottery winnings are paid over 20 to 25 years and the Internal Revenue Service withholds 28 percent federal income tax from each check. For example, if you win $1 million, most states will pay you $50,000 a year for 20 years minus 28 percent federal withholding tax, leaving you with $36,000 a year.

In addition, you may also have to pay additional income taxes when you file your income tax retum, depending on your overall financial position. The fact is that the $36,000 you get today will only buy you an $11,225 lifestyle 20 years from now. As with a fixed annuity, there are no cost-of-living increases for lottery disbursements.

How to Get Around Taxes on Lottery Winnings
Averaging a ten percent return on your investment is practically the norm these days. If you can average that kind of return, mathematically you can double your money about every seven years. The taxes on lottery winnings are inevitable. With all the investment options available and wealth management plans at your disposal, it only makes sense to get a lump sum today and build it for the future.

Some of you might be shocked by these figures but the fact remains that money creates money. If you win the lottery you will have to pay taxes on lottery winnings. There is no getting around that. However, smart people will parlay the lottery winnings into lottery winnings for generation after generation.

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