How Will Billion Dollar Lottery Winner Fair Under New Tax Law?
How Will Billion Dollar Lottery Winner Fair Under New Tax Law?
What would you do if you won $1.5 billion dollars? That’s exactly what happened for one ultra lucky individual in October. The life of the winner of the largest single ticket jackpot in history will never be the same. What about his or her taxes? We all know the amount of a lottery jackpot is never the actual take-home amount.
Even if the winner chooses the annual payment, he or she will still have to give a large portion to the IRS. If the person selects the lump sum he or she will get $877 million upfront. Not bad.
But then come the taxes. So how will the Tax Cut and Jobs Act affect the winner’s actual take-home amount? For starters, before the new law the highest tax rate was 39.6 percent. Now it’s 37 percent. That’s a saving of about $23 million. On the other hand, the state and local income tax deduction is now limited to $10,000. Previously, there was no limit. That would cost the winner as much as $64 million.
However, the actual amount of that deduction would have been limited to about $35 million, meaning a federal tax bill of about $14 million. Thanks to the $23 million saved from the new lower 37 percent tax rate, the net gain would be $9 million.
The other law affecting the final take-home amount is the estate tax exemption, which increased to $11.18 million for each individual. This would save a married couple about $4.5 million in taxes. So, if you add up the numbers, the new tax law will likely save the winner about $13.5 million, when compared to the old law.
No matter how you slice it, this ultra lucky lotto winner is now a very wealthy individual.
We hope you found this article about “How Will Billion Dollar Lottery Winner Fair Under New Tax Law?” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
To receive our free newsletter, contact us here.
Subscribe to our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Five Tips to help You Save On Your 2014 Income Tax Bill
Although there are still more than two months to go before we turn the page on the year 2014, the end of the tax year is still fast approaching. While it’s true that April 15 may seem like a long ways off, the fact is you only have those precious two months left to still…
Need Tax Help for Your Multinational Business?
If you run an international or multinational business, whether it’s based in the United States or abroad, then you know the different intricacies that this situation can involve. Not only do you have to consider all the business and tax laws for the country in which you are based, but you also have to be…
IRS’s Direct Pay Service Is Gaining Popularity
Everyone seems to love things that are automatic. In fact, when it comes to financial transactions, cash is hardly ever involved anymore, these days, as everything happens with either swipes or pushing buttons. The same is true with taxes, including the popular e-file option for millions of taxpayers every year. It turns out getting your…
Federal Government Looking for Ways to Get to Retirement Funds
Just when you thought your retirement account was safe from the federal government, think again. That’s’ because according to the Government Accountability Office, there are around 9,000 U.S. taxpayers who have a minimum of $5 million in an individual retirement account. Now some lawmakers are taking a closer look at these accounts because as Senate…