A Fuquay-Varina, North Carolina couple was overjoyed when they won $100,000 on the Season-End Extravaganza from The North Carolina Lottery. (Photo: nclottery)
Fuquay-Varina couple’s joy turns to disbelief as they realize the true cost of their $100,000 lottery win
A Fuquay-Varina, North Carolina couple was overjoyed when they won $100,000 on the Season-End Extravaganza from The North Carolina Lottery. Roger Lundy informed his wife about the win after receiving an email notification, but their excitement turned to disbelief when they realized that they would only get to keep around two-thirds of their cash. Lundy planned to use the winnings to purchase a much-needed new car, specifically considering a Hyundai Palisade.
Lundy encountered the harsh truth when he arrived at the lottery headquarters in order to retrieve his prize. After deducting federal and state taxes, his final receipt was $71,500, representing a loss of over $28,000 to taxes. The 24% withholding by the IRS on prizes exceeding $5,000 and the fixed tax rate of 5.25 percent in North Carolina substantially diminished the couple’s windfall.
It is not unusual for lottery winners to encounter this situation, as they are frequently presented with the choice between receiving the entire advertised jackpot over a period of 30 years or electing a lump sum in advance, which may ultimately be significantly less than the advertised amount.
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This case mirrors similar occurrences across the nation, where lottery winners have experienced substantial reductions in their winnings after taxes and other withholdings. For instance, another North Carolina lottery player took home just $1,200,000 of a $2,000,000 prize after tax deductions. Moreover, a New York player ended up with just $3.2 million after hitting a $5 million jackpot on a scratch-off ticket. These instances underscore the often-overlooked reality that lottery winnings are subject to significant reductions due to various financial factors.
In light of this revelation, the Fuquay-Varina couple’s experience serves as a cautionary tale about the true implications of winning a large sum in the lottery. While such wins can bring immense joy, it is essential for winners to be mindful of the substantial tax implications and the practical impact on the actual amount received, highlighting the importance of financial planning and understanding the full cost of a lottery windfall.
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