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

  • Police response to Texas school shooting remains unclear

    World News CTV News
    AUSTIN, Texas -- Santa Fe High School had conducted active shooter drills, armed police officers patrolled the hallways and students went through a scare in February after a false report of a campus gunman. But in the aftermath of the deadliest public school shooting in Texas history, early witness accounts and recordings from emergency dispatch describe a 30-minute nightmare as the real thing unfolded last week, even as authorities continued to keep details close Sunday. Source
  • Several Atlantic fisheries closed due to presence of two right whales

    Canada News CTV News
    MONCTON, N.B. -- Federal authorities are closing several fisheries in the Gulf of St. Lawrence because of the presence of North Atlantic right whales. In a statement posted on Twitter, Fisheries Minister Dominic LeBlanc says two of the severely endangered animals have been spotted off the coast of New Brunswick. Source
  • Ontario New Democrats forced to admit to annual $1.4-billion costing error

    Canada News CTV News
    PETERBOROUGH, Ont. -- Ontario's New Democrats, often accused of fiscal incompetence, made a $1.4-billion annual costing mistake in their election platform, the party's leader was forced to admit on Sunday. The miscounting of a $700-million annual reserve fund as revenue rather than as an expense will affect deficit projections for several years, Leader Andrea Horwath conceded. Source
  • Victims of alleged LSD brainwashing experiments in Montreal plan to file lawsuit

    Canada News CTV News
    Survivors and families of those who allegedly underwent brainwashing experiments at McGill University in Montreal are planning a class-action lawsuit against the Quebec and federal governments because of what they claim had been done to them decades ago. Source
  • Kayakers take Kinder Morgan protest offshore in U.S.

    Canada News CBC News
    More than 200 kilometres south of where the Kinder Morgan Trans Mountain pipeline expansion is slated to end, environmental groups in the U.S. took to the water in Seattle on Sunday to add their voices to ongoing opposition to the project. Source
  • Sask. couple swept away by B.C. mountain landslide can't believe they're alive

    Canada News CBC News
    Saskatchewan couple Sheri Niemegeers and Gabe Rosescu do not remember much after the wall of mud and trees came hurtling down a steep mountain pass toward their vehicle. But, according to Rosescu's sister Andrea, they both recall the split second when they realized they were in the path of a landslide. Source
  • Cyclists near Seattle tried to scare cougar but it attacked, killing 1

    World News CTV News
    SEATTLE - The two mountain bikers did what they were supposed to do when they noticed a mountain lion tailing them on a trail east of Seattle. They got off their bikes. They faced the beast, shouted and tried to spook it. Source
  • 'I could have ID'd him': Woman says Dominican resort didn't investigate claim that she was raped by staffer

    Canada News CBC News
    A Toronto-area woman says she is going public to warn travellers, after a security guard at a Dominican Republic resort raped her and the hotel "did nothing" to investigate — an occurrence she believes is all too common. Source
  • Canadian vacationers stranded in Cuba following plane crash

    Canada News CTV News
    In the wake of a horrific plane crash in Cuba that claimed the lives of 110 people, dozens of Canadians are now stranded in the country, wondering when they will be able to fly home. Source
  • Police video shows harrowing escapes from California fires

    World News CTV News
    SANTA ROSA, Calif. - Chaotic police body-camera footage from last year's deadly wildfires in Northern California's wine country shows officers running door-to-door urging people to flee and rescuing elderly residents of a retirement community as flames bear down, according to a newspaper report Sunday. Source