Winning the lottery is a life-changing thing. Winning $1.025-billion from the lottery is INSANE... until you get taxed on it.
Everyone is thinking about what they would do with their winnings if they happen to walk away with the jackpot of $1-billion, but not many are thinking about the taxes.
So here's a little breakdown for you.
You have two options of receiving your money-- you can take it out in installments over 29 years or you can take the lump cash offer (which is what most people would choose).
If you pick the lump sum payout, you're looking at $602.5-million in cash. Then the IRS will immediately get a 24-percent cut, which totals $144.6 million. You’ll also owe another $78.3-million when you file your taxes. Luckily, we have no income tax here so you can save money there.
In total, you're looking at a $379.6-million payout (37% of the total jackpot).
If you choose to be paid out in 30 annual payments, you'll be paid out the full amount... but there are still taxes. You're looking at increments of $31.4-million before taxes. With the 24-percent federal withholding, it brings you to $8.2-million. Then the additional federal tax takes you to a deduction of $4.4-million.
In the end, you'll make around $21.5-million a year (in a state like ours with no income tax).