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Ohio Woman Scores $15M Lottery Win, But A Huge Tax Bill Means She May Only Take Home $4.5M – Here’s Why
In a stroke of unbelievable fortune, Jeanne, a Sandusky, Ohio resident, won $15 million in the state’s 50th Anniversary scratch-off game this past June.
Describe when Jeanne told the Ohio Lottery Commission that she had “dropped to the floor” after realizing her win. At the store, the clerk and Jeanne had cried together, leaving bystanders wondering what on earth had just happened.
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While $15 million might seem like a life-altering sum, Jeanne’s final payout will be much less due to taxes, leaving her with around $4.5 million. It’s a classic example of a lottery winner facing a significant reduction in winnings after taxes – an issue many winners don’t see coming.
Jeanne had the option of receiving $600,000 annually over 25 years (which totals the advertised $15 million) or a lump sum of around $7.5 million. She chose the lump sum. According to Moneywise, Jeanne will be left with around $4.5 million after paying federal and state taxes, a far cry from the headline-making prize.
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So, why is there such a huge difference between the $15 million jackpot and her final earnings?
The IRS requires lottery agencies to withhold 24% of any prize over $5,000. For Jeanne, that meant $1.8 million was withheld for federal taxes from her $7.5 million lump sum. But the story doesn’t end there.
Since lottery winnings are taxed as ordinary income, Jeanne’s windfall pushes her into the highest federal income tax bracket of 37%. This means her total federal tax liability rises to approximately $2.73 million, Moneywise reported.
State taxes also take a bite out of Jeanne’s winnings. Ohio taxes lottery income at 3.5%, which means Jeanne will owe around $262,000 to the Buckeye State. Jeanne’s total tax burden is nearly $3 million, leaving her with just $4.5 million. It’s not bad for a $50 scratch-off, but far from the $15 million advertised.
Given these eye-watering deductions, one might wonder if Jeanne should have opted for the annuity. Would she have taken home more money in the long run?
By choosing the $600,000 annual payment for 25 years, Jeanne would receive the full $15 million over time. Her tax burden would be spread out and she’d pay yearly taxes based on her income.
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In 2024, that means she’d owe roughly $180,000 in federal taxes and $20,000 in state taxes on the first $600,000 installment, according to current tax brackets. However, tax rates could shift over the next two decades, potentially lightening her tax load if Ohio’s proposed income tax elimination passes.
Many financial experts advocate for the annuity option as it ensures a steady income stream. According to certified financial planner Michael Kitces, annuities can reduce the risk of quickly burning through a lump sum. Steady payments help prevent financial risks.
That said, the lump sum offers immediate financial freedom, likely why Jeanne chose it. Many winners use lump sums to pay off debts, buy homes or invest in growth opportunities.
But as tempting as immediate access to millions might be, experts warn that having a plan in place is essential. Without solid financial advice, it’s easy for winners to blow through their money faster than they think.
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This article Ohio Woman Scores $15M Lottery Win, But A Huge Tax Bill Means She May Only Take Home $4.5M – Here’s Why originally appeared on Benzinga.com
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Sales of existing homes fell in September as house hunters remained on the fence about buying a home despite mortgage rates easing during the month.
Existing home sales slipped 1.0% from August’s tally to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said Wednesday. That marked the lowest rate since October 2010. Economists polled by Bloomberg expected a pace of 3.88 million in September.
On a yearly basis, sales of previously owned homes were 3.5% lower in September. The median home price rose 3.0% from last September to $404,500, marking the 15th consecutive month of annual price increases.
“Home sales have been essentially stuck at around a 4 million-unit pace for the past 12 months,” NAR chief economist Lawrence Yun said in a press release.
There have been significant challenges that have weighed on sales activity, including a lack of inventory, escalating prices, and elevated mortgage rates. Last month, however, those factors turned around.
The Federal Reserve cut its benchmark rate by half a percentage point in September. While the central bank doesn’t set mortgage rates, its actions influence their direction of movement.
Mortgage rates hit the lowest level since February 2023 ahead of the Fed decision to ease, while listing inventory picked up.
But overall, that hasn’t been enough to entice buyers.
“Some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” Yun said.
Tesla (TSLA) reported mixed third quarter results after the bell on Wednesday, but the stock jumped in after-hours trading as investors cheered the earnings beat, higher gross margins, and news that Tesla’s cheaper EV is on track for production next year.
For the quarter, Tesla reported revenue of $25.18 billion vs. $25.4 billion per Bloomberg consensus, higher than the $25.05 billion it reported in Q2 and also topping the $23.40 billion Tesla reported a year ago. Tesla posted adjusted EPS of $0.72 vs $0.60 expected, on adjusted net income of $2.5 billion and free cash flow of $2.9 billion.
The closely watched gross margin figure came in at 19.8%, much higher than the 16.8% expected.
Tesla shares were up nearly 8% in after hours trade.
“We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes,” the company said in its earnings deck. “Preparations remain underway for our offering of new vehicles — including more affordable models — which we will begin launching in the first half of 2025.”
Earlier this month, Tesla (TSLA) announced third quarter deliveries that slightly missed expectations, sending the stock lower.
Tesla said it delivered 462,890 vehicles in Q3, up 6.4% quarter over quarter, to mark the first quarter of delivery growth this year. The numbers also came in ahead of the 435,059 EVs the company delivered in the year-ago period. But Wall Street had expected Tesla to deliver closer to 463,897, according to Bloomberg.
“Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter. Cybertruck production increased sequentially and achieved a positive gross margin for the first time,” Tesla said in its report.
Tesla said it expects vehicle deliveries to achieve “slight growth” in 2024.
Ahead of Tesla’s Q3 disclosure, shares were down approximately 11% since Tesla revealed its robotaxi, dubbed the Cybercab, at its showy “We, Robot” event from the Warner Bros. studio lot in Burbank, Calif., on Oct. 10.
The debut and release of a cheaper EV is what many analysts and industry watchers believe will spur the next leg higher of EV sales, as even CEO Elon Musk has said before. During its Q2 report, Tesla and Musk said the company remains on track for the production of new vehicles, likely including a cheaper EV, in the first half of next year.
Investors and analysts were left wanting more details from Tesla’s “We, Robot” event on the Cybercab itself and detailed testing plans, along with questions about the development of Tesla’s sub-$30,000 EV, dubbed the Model 2.
Transak disclosed a data breach affecting over 92,000 users after a phishing attack compromised an employee’s laptop.
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The Dow plummets more than 600 points and is on track for its worst day in more than a month
The Dow Jones Industrial Average and other major indexes suffered a steep decline Wednesday afternoon as the yield on the benchmark 10-year U.S. Treasury note continued its upward climb, reaching 4.23%—a level not seen since July.
In the afternoon, the Dow dropped 631 points, or 1.4%, heading for its worst day in over a month. Meanwhile, the tech-heavy Nasdaq and the S&P 500 declined by 2.2% and 1.4%, respectively. However, there was some relief for investors as oil prices eased, with West Texas Intermediate (WTI) futures trading around $70.65 per barrel.
The Federal Reserve’s Beige Book, released in the afternoon, reported that economic activity remained largely unchanged across the 12 Federal Reserve Districts, with the Southeast significantly impacted by a harsh storm season.
On Wednesday, all eyes are on Tesla (TSLA) as the company prepares to release its latest earnings report. Analysts expect earnings per share to be 60 cents, down from 66 cents a year ago but an improvement from 52 cents in the previous quarter, according to FactSet estimates. Revenue is projected to hit $25.4 billion, compared to $23.3 billion in the third quarter of 2023 and $25.5 billion in the preceding quarter.
Apart from Tesla, investors are closely monitoring earnings reports from other major corporations, including AT&T (T), Boeing (BA), and Coca-Cola (KO).
McDonald’s stock plunges over 5%
McDonald’s (MCD) shares took a sharp hit, falling over 5% after the Centers for Disease Control and Prevention (CDC) linked the chain’s Quarter Pounder burgers to an E. coli outbreak. The outbreak has led to 10 hospitalizations and one death, driving a significant decline in McDonald’s stock during the afternoon trading session.
As of now, 49 cases have been reported across 10 states between Sept. 27 and Oct. 11, with a majority of illnesses occurring in Colorado, Nebraska, Utah, and Wyoming. The CDC noted that most of those affected had eaten a Quarter Pounder. Investigators are working swiftly to identify the contaminated ingredient.
Spirit Airlines stock soars 30%
After a failed attempt at merging with JetBlue (JBLU-0.80%), ultra-low-cost carrier Spirit Airlines (SAVE+28.01%) is reportedly turning back to a familiar partner. The Wall Street Journal (NWSA-0.34%), citing people familiar with the matter, reports that Spirit and Frontier Airlines (ULCC+3.05%) are in early talks over a potential merger. The news sent Spirit’s stock soaring nearly 30% on Wednesday.
–Francisco Velasquez and Rocio Fabbro contributed to the article
The semi-autonomous region of Tanzania is taking advantage of a sandbox regulatory framework adopted in July.
Bitcoin’s correction ignited selling in altcoins, which are slipping below critical support levels.
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