Don't Be Fooled By The Jackpot Figure And Make The Wrong Choice


The Lohse family won this Powerball $202 million jackpot. The lump-sum payment was $129.8 million, and after taxes were left with $90.9 million dollars. 

Those large jackpots you see advertised at many big lottery games? Well, they can be misleading, because those enormous figures are not what you'll get in your pocket once all the excitement has died down.

Many countries give two payout options for their prizes. The larger one is the most advertised for obvious reasons - it sells more tickets.

But for many winners that jackpot amount will be reduced if they take the popular cash option instead of the full amount in a 20-29 year annual payout.

There are a couple of reasons why the amount is different:


Most USA games show an annuity payout in their jackpot figures. That's the total amount the organizers pay the winners over an extended period in installments. Often these are annual payouts spread over up to 29 years, making up the large jackpot totals you see in many games.

If the winner takes a cash sum, this amount is reduced considerably.

For example, for the $640 million Mega Millions game, the cash lump sum payout was $474 million.

And this amount is before tax. There are several taxes that are withdrawn from the winning amount as well.


In the USA, all lottery winnings are subject to Federal and some local taxes. The IRS takes a 25% withholding tax from any wins over $5,000.

But of course large winners find themselves in a higher tax bracket too, so this tax amount can rise substantially.

RELATED: Do You Live In These 9 Lucky Countries Where You Pay No Tax On Lottery Winnings?

In Europe jackpots are usually tax-free, and the jackpots are paid in a lump sum so there's little worry there - all the costs are taken out and the advertised jackpot is the final amount.

So if you are a winner in the USA, what should you do to get the most value from your win?

Many winners opt for the cash advance. Even though it's lower, there is a definite advantage on having the money in your bank as a final figure. It allows many people to pay off their debts and make large purchases such as houses.

Here's some more information from CNN Money on how to choose your payout option.


I was a non believer until i looked through all your material, it took weeks you have written a lot! Anyway, I think i have found out how it works so I bought some tickets last week and it got me $37,000!!!! Thats not much according to some of youre winners, but to me its a years work and very welcome too. Thanks a million!