If you win the Powerball jackpot, get ready to say 'NO'
You may be surprised to learn exactly how much of a lottery jackpot you really get to keep
Jai Agnish, Staff Writer, @JaiAgnish
Big lottery jackpot winners need to get really good at saying, 'no!'
Take it from an accountant whose firm once represented a big winner in the 1980s.
Daniel Mahler, certified public accountant with Gisler & Mahler in Bloomingdale recommends the winner practice saying no to requests he or she will most likely get, and seek professional financial help as well.
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Mahler, who is also mayor of Wanaque, said his law firm represented a $38 million lottery winner.
The $38 million winner is doing just fine, he said. He moved to Florida. His accountant followed him there and started a new firm.
Not all who win major jackpots fare as well. Mahler said some go broke.
So, here are some tips for big winners in New Jersey.
Expect to pay a boatload in taxes
Lots of the winnings will go toward income tax. Forget the 25 percent number that's been floating around out there. Mahler says it's more like 48 percent when all is said and done.
Let's look at a $500 million win as an example. If a winner opts for the cash value option of around $300 million, $144 goes to taxes, leaving $156 million. The winner also has the option of receiving the $500 million over 30 years and to pay tax on the yearly amount.
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Where did 48 percent come from? Welcome to the millionaire tax bracket. It's 37 percent now under President Donald Trump — down from 39.6 percent.
The rest of the 48 percent is made up of 11 percent from New Jersey's income tax rate. New Jersey Gov. Phil Murphy, managed to get a new millionaires tax rate passed from 8.97 percent to 10.75 percent for income earners over $5 million.
It essentially wipes out a lot of the aforementioned Trump discount, Mahler said.
The bottom line: In New Jersey lottery winners can expect to give about half of their winnings to pay taxes.
Tax season: Mahler said winners also had better file their taxes on time every year because when you're talking millions of dollars, the penalty on a late payment will sting.
Side note: Did you know in California lottery winners don't have to pay state taxes on the jackpot money? Just saying.
Get some pros to help you out
Mahler said lottery winners should take their time coming forward, and they need to line up the professionals.
"Get a good attorney, good accountant, good broker," he said.
He said some people simply can't handle that type of money.
"These numbers are staggering," Mahler said.
Mahler said he is personally a big fan of municipal bonds for a steady 3 to 4 percent income stream.
"You have to protect your wealth," he said.
A 3 or 4 percent return on millions of dollars is a lot of money, he said.
Don't change your lifestyle
Mahler said the winner probably won't be shopping at their local Walmart if they did before, but winners should live the way they lived before the money.
He even suggested lottery winners live at the same means and put the rest of the money away.
"Enjoy life," he said. "You have to do something with your life."
But, he said, winners should keep their job or volunteer somewhere.
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Get ready to say, 'no!'
Mahler said lottery winners need to be prepared for when people start asking them for money.
"Everybody looks for a handout," he said.
He recalled when someone knocked on a lottery winner's front door with a sob story about how a family member had cancer and asked for money.
"People just knocked on his door," Mahler said. "He had to change his phone number because people kept calling him. Everybody's going to be after you."
Follow Jai Agnish on Twitter: @JaiAgnish. Email: agnish@northjersey.com