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

  • Brexit campaign group Vote Leave referred to police for breaching spending rules

    World News CBC News
    Britain's Electoral Commission said on Tuesday it had fined the officially designated pro-Brexit campaign group 61,000 pounds ($106,065 Cdn) for breaching spending rules in the 2016 referendum and referred it to the police. Two years since voting 51.9-48.1 to leave the EU, the United Kingdom, the political elite and business remain deeply divided over whether the country should leave the European Union on March 29, 2019, and if so how. Source
  • 1 in 6 Canadians struggling with finances, Angus Reid survey finds

    Canada News CBC News
    More than a quarter of Canadians are already facing serious financial hardship, according to the findings of a new study released Tuesday as part of an examination of poverty. According to the report from the Angus Reid Institute, 21 per cent of respondents said they can't afford to go for dental care, while one quarter reported they have recently had to borrow money to buy groceries. Source
  • Second World War bomber touches down on Canadian soil

    Canada News CTV News
    It was a landing most people have only seen in old war movies. A massive B-29 bomber, nicknamed Fifi, touched down on Canadian soil this week as part of a mission to keep history alive. Source
  • Tesla shares fall after Musk's spat with British diver

    World News CBC News
    Shares of Tesla Inc fell 2.75 per cent on Monday after CEO Elon Musk directed abuse on Twitter at one of the British cave divers involved in the rescue of 12 Thai children last week. A number of analysts and investors, requesting anonymity, told Reuters that Musk's comments are adding to their concerns that his public statements are distracting him from Tesla's main business of producing electric cars. Source
  • No prison time for day care owner who put toddler in noose

    World News CTV News
    MINNEAPOLIS -- A Minneapolis day care owner was sentenced Monday to 10 years of probation for trying to kill a toddler in her home by hanging him from a noose. Nataliia Karia, 43, received her punishment in Hennepin County court after pleading guilty to attempted murder and third-degree assault earlier. Source
  • Alberta town divided over program to kill feral rabbits at $300 a pop

    Canada News CTV News
    An Alberta town remains divided over a controversial program to kill feral rabbits at a cost of nearly $300 per bunny. Ten years ago, the Town of Canmore had an estimated 2,000 feral rabbits. Source
  • Alberta town divided over program to kill feral rabbits at cost of $300 per bunny

    Canada News CTV News
    An Alberta town remains divided over a controversial program to kill feral rabbits at a cost of nearly $300 per bunny. Ten years ago, the Town of Canmore had an estimated 2,000 feral rabbits. Source
  • Families bury the dead after bloody weekend in Nicaragua

    World News CTV News
    MANAGUA, Nicaragua -- Families began burying the dead Monday following a bloody weekend in Nicaragua as police and paramilitary groups attacked roadblocks set up by anti-government demonstrators demanding President Daniel Ortega's exit from office. The family and friends of 20-year-old university student Gerald Vasquez, one of two students killed Saturday when pro-government groups attacked the National Autonomous University of Nicaragua, carried his casket to a Managua cemetery, chanting "They…
  • Lava crashes through roof of Hawaii tour boat, injuring 23

    World News CTV News
    HONOLULU -- An explosion caused by lava oozing into the ocean sent molten rock crashing through the roof of a sightseeing boat off Hawaii's Big Island, injuring 23 people Monday, officials said. A woman in her 20s was in serious condition with a broken thigh bone, the Hawaii County Fire Department said. Source
  • Protesters camped outside Saskatchewan legislature taking province to court

    Canada News CTV News
    REGINA -- Protesters camped outside the Saskatchewan legislature say they are taking the government to court over six arrests made last month. The people were taken into custody June 18 when Regina police enforced an eviction order. Source