How a Canadian Powerball winner could pocket more money than an American

With Wednesday's jackpot rocketing to a record US$1.4 billion, United States residents are caught up in Powerball fever.

But, an expert says, some Canadian players may have a few million extra reasons to get excited.

See Full Article

Non-U.S. citizens are legally allowed to purchase Powerball tickets, and they may actually be able to pocket more money than those living in the U.S., Kentucky lottery expert and financial consultant Don McNay said on CTV's Canada AM on Monday.

It all boils down to how lottery winnings are taxed.

The United States' federal government treats a jackpot as income, and can withhold 25 per cent of winnings as income tax for citizens with correct taxpayer ID numbers.

For those without ID numbers, that amount can go up to 28 per cent.

In Canada, on the other hand, "tax authorities do not consider lottery winnings to be taxable for Canadian income tax purposes," the Ontario Lottery and Gaming corporation says.

"Because your tax laws are better in this situation than the United States, you're probably better off," McNay said.

However, there are some complicated catches.

Under U.S. law, the Internal Revenue Service can "generally" withhold 30 per cent of "gambling winnings paid to a foreign person," so Canadian winners aren't totally off the hook for federal taxes.

And, depending on the state, where you purchase your lottery tickets, you may also be required to pay a state income tax on their winnings.

The website USA Mega, which tracks the Mega Millions and Powerball lotteries, breaks down how much each state charges in taxes.

New York, for example, has the highest state lottery tax at 8.82 per cent. This tax applies to both residents and non-residents who bought tickets in the state.

Meanwhile, in Washington, there's no state tax on lottery prizes.

The payout also differs depending on whether the winner wants to accept the prize in one lump sum, or would prefer the money in yearly instalments.

The advertised $1.4 billion jackpot actually refers to the value of the prize in annual payments, which are adjusted for inflation.

If the winner wants a one-time lump sum, the jackpot drops to $868 million before taxes, USA Mega says.

As a result, the site says that means the total payout after taxes in New York, for example, could end up as low as $574,442,400 – or less than half the advertised amount.

Of course, all the calculations will ultimately prove irrelevant in the end.

Regardless of which side of the border they call home, Powerball players have only a one-in-292.9 million chance of winning the jackpot, McNay said on Monday.

For those willing to risk the odds, the next Powerball draw is on Wednesday.

Tickets cost two U.S. dollars, and must be purchased from a licensed retailer in one of the 44 states, or two U.S. territories where Powerball is played, or in Washington D.C.



Advertisements

Latest Canada & World News

  • NYC gives final salute to slain NYPD officer

    World News CTV News
    NEW YORK -- Police arrived by the thousands in their finest dress blues on Friday, as a light snow drifted under an overcast sky, to honour a fallen brother -- during the first of two funerals that again brought sorrow to the New York Police Department. Source
  • Belarus leader tells opposition leaders: 'Repent and kneel'

    World News CTV News
    KYIV, UKRAINE -- Belarus' authoritarian leader on Friday advised exiled opposition activists to "come home, repent and kneel," while repeating a vague promise to step down if the people "make the decision" for him. President Alexander Lukashenko made the remarks in his yearly state of the nation address, seeking to underscore his grip on power after suppressing an unprecedented wave of mass protests against his rule. Source
  • Russia won't start a war in Ukraine, says foreign minister

    World News CBC News
    Russian Foreign Minister Sergei Lavrov said Friday that Moscow will not start a war in Ukraine, but warned that it wouldn't allow the West to trample on its security interests, amid fears it is planning to invade its neighbour. Source
  • Iraqi army: Rockets hit Baghdad airport, damage two planes

    World News CTV News
    BAGHDAD -- Six rockets struck Baghdad's international airport facility on Friday, damaging two commercial planes but causing no casualties, Iraq's military said in a statement. The rockets fired in the early morning landed on planes parked in a waiting area of Iraqi Airways, the country's national carrier, the statement said. Source
  • UN: 'Extreme lack of food' for many in Ethiopia's Tigray

    World News CTV News
    NAIROBI, KENYA -- More than a third of the people in Ethiopia's embattled Tigray region "are suffering an extreme lack of food," the United Nations World Food Program said in a new assessment of a region under a months-long government blockade. Source
  • As Johnson waits, U.K. police seek cuts to 'partygate' report

    World News CTV News
    LONDON -- Doubt about the timing and content of a key report into lockdown-breaching parties within the British government deepened Friday when police said they wanted parts of it to remain unpublished until they finish a criminal investigation. Source
  • Burkina Faso's junta leader promises security, order

    World News CTV News
    OUAGADOUGOU, BURKINA FASO -- Burkina Faso's new military leader said he was going to bring security and order back to the conflict-ridden nation and unite the country, but warned that betrayal wouldn't be tolerated by the new regime. Source
  • Student nurses joining Alberta hospitals eager to ease Omicron pressure

    Canada News CBC News
    Student nurses joining the front lines of Alberta's strained health-care system during the fifth wave of the COVID-19 pandemic are eager to help ease the pressure on provincial hospitals. "Every unit has a bit of a different plan for us but we're hoping it puts more bodies in the workforce," said Bobbie-Jo MacMillan, a fourth-year nursing student at the University of Calgary who is now employed in the initiative. Source
  • Russia says it won't start a war as Ukraine tensions mount

    World News CTV News
    MOSCOW -- Russia's top diplomat said Friday that Moscow will not start a war in Ukraine but warned that it wouldn't allow the West to trample on its security interests, amid fears it is planning to invade its neighbour. Source
  • Inside a US$128M jewel heist, and the police chase that followed

    World News CTV News
    It took at least nine hard blows from an ax to smash the glass case in Dresden's historic Green Vault. Once the glass shattered, the two masked thieves grabbed 21 priceless diamond-studded artifacts and disappeared. Source