According to The Sun, A lottery player has faced a significant financial hit after claiming a life-changing prize. Brooklyn native Roy Norman recently came forward to collect his winnings from a Powerball drawing held on August 3.
Winning Details
According to a press release from New York Lottery officials on October 23, Norman matched all five white balls in the drawing but narrowly missed the red Powerball. The winning numbers for the August 3 drawing were 13, 33, 40, 60, 61, with a Powerball of 20. While matching five numbers typically nets a $1 million prize, Norman opted for the additional $1 Power Play option on his ticket, doubling his winnings to an impressive $2 million.
The Claim Process
Norman purchased his winning ticket at a Lucky Choice convenience store in Brooklyn just before the drawing. With the prize pot exceeding $600,000, he faced the choice of either visiting a New York Lottery Customer Service Center or Prize Claim Center or mailing in his ticket along with a signature and claim form.
Payment Options: Lump Sum vs. Annuity
One of the most critical decisions for lottery winners is how to collect their funds. In the United States, players can choose between a one-time lump sum distribution or annuity payments spread over several years. Each option has its pros and cons.
Advantages of Annuity Payments
Annuity payments provide reliable, consistent income over an extended period and come with tax benefits. This approach can help prevent winners from spending all their money too quickly, offering a safety net in case of financial missteps in any given year.
Benefits of Lump Sum Payments
On the other hand, opting for a lump sum allows winners to receive immediate cash, presenting ample investment opportunities to grow their wealth over time. However, managing large sums of money can be challenging, making it advisable to consult a financial planner for guidance. It’s also important to note that lump sums come with significant tax implications.
Also read: November Social Security Payments: What to Expect with Amounts of $698 and $1,539
Tax Implications for Lottery Winnings
Roy Norman’s $2 million win faced substantial tax deductions. The federal government imposes a 24% tax on all lottery winnings over $5,000, while states set their own rates. New York’s tax rate was 8.82% last year and has even increased this year, according to Wisevoter.
As a result, Norman’s August 3 Powerball win was subject to over $775,520 in taxes and fees, leaving him with a take-home amount of $1,224,480. This outcome is still a considerable return on his investment in the Powerball ticket.
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Norman is not alone in facing hefty tax deductions. A Florida resident recently lost $300,000 after winning $1 million on a scratch-off game. Additionally, a winner of a $478 million Powerball jackpot in Georgia earlier this month will also see nearly half of their winnings go to taxes.
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