“I started shaking,” Kings Mountain man says of $2 million Powerball prize

2/15/2019 03:01 - Gustavo L.

So the $400k interest is an assumption that if and only if a player put the lump sum in the bank without touching a cent for 20yrs, he/she will earn the $400k. Which that tell you this rule is wrong because after taxes you get aprox $421k. So basically we are playing these games to win only $400k and don’t be a millionaire. Another thing as I believe this money will go to education, can the winner deduct that on their taxes. Thanks! NC Lottery
Lottery winnings are considered income and are taxed at the minimum amount when the prize is claimed. The lottery does not make decisions regarding taxes and we cannot give tax advice. If you have any questions about taxes related to lottery winnings, we always recommend you talk to a tax professional.

2/14/2019 10:12 - Gustavo L.

NC Lottery: Thanks for the response. So that means if I win $1M and take the annuity payments, I will receive $50k annually for 20 yrs plus interest that will be $20k more less of course taxes. So at the end the winner will get a gross winning amount of $1,400,000 (principal and interest), right?NC Lottery
Hi Gustavo, Not exactly. For a $1 million prize, winners have the option of the $600,000 lump sum or a 20 year annuity at $50,000 per year. Taxes would be withheld on either the $600,000 or each $50,000 payment, depending on which prize the winner chose. A simple way of thinking about it the annuity is to imagine the $600,000 lump sum is put in the bank where, over time, it earns interest – a lot of interest. That’s what makes it possible for the full $1 million annuity to be paid out over 20 years. The prize would not go above the advertised $1 million total.

2/13/2019 11:53 - Gustavo L.

Congrats on your winning! Question to NC Lottey: Why when a player wins $1M or more they only take the Fed/State taxes required on the PowerBall but if you win $1M on scratch tickets you penalized them with 40% then the taxes. Another question: If the PB ball is X 5 why will only pay $2M instead of $5MNC Lottery
All great questions, Gustavo! In general, top prizes of $1 million or more for scratch-offs offer players the option of the lump sum or annuity. The 40% difference you noted is not a penalty, but simply the difference that $600,000 would make in interest if it sat in the bank for 20 years. That is the same for the Powerball jackpot. The $1 million Powerball prize is the second-level prize, which the lump sum/annuity does not apply. Under the Powerball prize structure, the second tier prize of $1 million doubles if you have a $3 Power Play ticket. Here's a link to the prize structure in the game. https://www.nclottery.com/PowerballHow