[quote][b]Posted by:[/b] A Good Troll [quote][b]Posted by:[/b] Scottus4 [quote][b]Posted by:[/b] Mastergee You get 575000 dollars taken off in tax?[/quote] You don't actually win a million dollars. You win an annunity that pays out a million dollars over a period of time. When you take tax out, the true present value is that 425,000$. [/quote] Not at all. Both have a present value of $1 million. You can either take $1 million pre-tax income now, or $1 million pre-tax income spread over a set number of years. The reason the very few people take the annuity option is they are taxed less on it up front because they aren't placed in a higher tax bracket for all that income at once. $575,000 in taxes comes from bumping into the top tax bracket (35%), it being counted as ordinary income so you have to pay FICO taxes like social security tax/medicare tax (6.2% for Social Security, 2.9% for Medicare), State taxes (Illinois is 6.25%), and local income taxes. The reason people pick the lump sum over the annuity (in addition to the "get it now" mentality) is that the annuity is not adjusted for inflation. Twenty years from now, your structured annuity payment will be worth much less in buying power terms than it is now.[/quote] It varies between lotteries. Some are actually the stated prize that can be taken as an annuity, others award an annuity of that pays out the listed amount over a period that can be taken as a lump sum. Powerball is the later, which is what comes to mind when I think "lottery". [Edited on 01.08.2013 5:53 AM PST]