How do countries deal with unclaimed lottery bonuses? How much tax the lottery winner has to pay in US

The prize lottery has great value but no one to receive is not uncommon in the world. Countries have two ways of dealing with this: making welfare investments or returning prize funds.

US: Bonuses split back to states or returned to prize funds

In fact, big jackpots of great value that no one comes are not uncommon in America. Those who are lucky to win the biggest prize in PowerBall or Mega Millions lottery will have 180 days to receive the prize.

After this time, the prize money will be redistributed to the states participating in the Jackpot contribution of the lottery according to the amount of money they contributed. 

The purpose for which the money will be used will depend on individual regulations in each state. For example, Michigan will use the unclaimed lottery prize money to contribute to the state’s educational support fund. In California, this money will go into building facilities for the public school system. In South Carolina, the money is also used for educational development.

According to the National Lottery Association, in some cases, some states will return unclaimed bonuses to the prize fund for subsequent draws.

In fact, big jackpots of great value that no one comes are not uncommon in America. Those who are lucky to win the biggest prize in PowerBall or Mega Millions lottery will have 180 days to receive the prize.

In 2016 alone, there was $27.6 million in unclaimed lottery prizes in Michigan.

In 2016 and 2017, unclaimed lottery prizes in New York reached $103 million and $74 million, respectively.

According to according to statistical results from https://loto188.me, every year Americans “forget” about $2 billion in lottery bonuses. 

Europe: Bringing home the country that sold the winning ticket

According to the homepage of the EuroMillions lottery, there are still a certain number of prizes each year with no prizes to go to. “This could be because the lottery ticket has been lost or damaged or even the winner didn’t realize he or she had won the big lottery,” according to EuroMillions.

Up to now, the biggest unclaimed jackpot of this lottery is in 2012. The fact of the matter is that the owner of a winning lottery £63.8 million has “forgotten” to receive money.

Because the lottery prize is issued in many European countries, if after 180 days no one comes to claim the prize, the entire prize money will be returned to the country where the lottery was sold and used by countries. used for different purposes.

In the UK, for example, this money will go to the national lottery welfare fund to invest in areas such as sports, arts, health and education.

“So if a jackpot winner doesn’t accept the bonus, they can still benefit from the positive aspects that the huge bonuses bring to the community,” EuroMillions wrote.

VND 136 billion without recipients, what does Vietlott do?

Vietlott financial management is regulated in Decree 122 issued by the Government in 2017.

Specifically, Clause 2, Article 4, Chapter II of Decree No. 122/2017/ CP-ND issued by the Government on November 13, 2017 stipulates for jackpot cumulative prizes (Jackpot), If at the end of the prize period, the winner does not come to receive the prize, the enterprise conducting lottery business is allowed to account it into other income of the enterprise. Also according to this Decree, Article 6 stipulates that, after determining ticket sales, Vietlott is responsible for fulfilling its obligations to the State budget including value added tax (tax rate of 10%) and Special consumption tax (tax rate of 15%), personal income tax from the winner (the tax rate of 10% in excess of VND 10 million). 

After deducting business expenses, net profits plus other income will be paid by corporate income tax (20% tax rate) and allocated to the local budget. After setting aside funds according to regulations (Decree No. 91/2015/ ND-CP), Vietlott is obligated to allocate the remaining remaining profits to the local budget. The distribution of taxes and all remaining profits are made by Vietlott in proportion to the actual revenue generated in the area.

According to the enterprise, the money will be used to invest in the fields of education – training, health, new rural construction, and works to cope with climate change. and other social welfare works in accordance with the Ministry of Finance’s Circular No. 71/2017/ TT-BTC of July 13, 2017.

“136.5 billion unclaimed people in 2018 actually contributed to local budgets according to the revenue contribution structure in the markets of provinces and cities,” said the representative of the enterprise.

According to Vietlott’s report, in 2018, Vietlott contributed VND 1,200 billion to the budgets of 48 provinces and cities. The amount of corporate payment to the State has increased by nearly 10%, although the revenue has remained almost unchanged compared to 2018 at nearly VND 3,900 billion. A representative of the company shared that this result was obtained from great prizes with no one to win in the field.

How to pay taxes when winning lottery in the US?

In the US, lottery winners have to pay a variety of taxes with different rates depending on where they live.

When winning a lottery in the United States, people must pay these taxes including: Federal tax, State tax and Local tax. However, some states, counties and cities do not require tax.

In 2019, the highest federal tax rate is 37% for total income in excess of US $510,300 for singles and US $612,350 for married people filing a joint return.

Of which, 24% of the prize value has been withheld by PowerBall and Mega Millions to pay federal taxes, the winner only needs to pay the remaining amount or receive the balance if any.

In the US, lottery winners have to pay a variety of taxes with different rates depending on where they live.

Federal taxes are applied on the prize value after all deductions are taken out. State taxes and local taxes are two of those deductions. However, the Tax Cuts and Jobs Act limits the maximum deduction for each type to $10,000 in tax years from 2018-2025.

In particular, the areas with the highest tax rates were Oregon (9.9%), Minnesota (9.85%), Iowa (8.98%), New Jersey (8.97%), Colombia and Vermont. (8.95%).

However, New York City residents of Yonkers and New York are the highest taxpayers in the US when they win the lottery because of both state and local tax rules. If adding 3.9% of local taxes to 8.8% of state taxes, the rate of lottery winners here pay 13%.

All in all, there are still things you need to know about lottery, you should find out more.

About RJ Frometa

Head Honcho, Editor in Chief and writer here on VENTS. I don't like walking on the beach, but I love playing the guitar and geeking out about music. I am also a movie maniac and 6 hours sleeper.

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