As the big Powerball drawing looms just a day away, it's already made history as having the biggest jackpot ever...now at $1.5 billion. It may be no surprise to you, but the odds of you holding the winning ticket are roughly one in 292 million. But just in case you do have that winning ticket, one of Reno's foremost accountants has some advice for you. As CPA Melvin S. Ray told us, "People take advantage of you and you can go through a lot of the money, awful quick."
Melvin Ray would know…he's counseled big casino and lottery winners before in his over 40 years of accounting here in Reno. But this Jimmy Buffet and Grateful Dead fan says buying tickets is not a waste. As he told us, "I would invest a few bucks in it. Sure...why not?" Melvin’s first piece of advice to the winner: don't try to manage that huge cardboard 10-figure check alone. As he told us, "Get an attorney, get an accountant…a CPA. Also get a good financial adviser to help you with the investments."
The $1.5 billion payout is what you'd get if you opt for the 29 annual payments. If you choose the lump sum payout, the jackpot is actually $900 million. Which has the lowest taxes? When the amount is this big, he says neither. Even those annual payments will put you in the highest tax bracket. As he put it, "At this level, you'll still be at the 39 percent tax bracket."
If you live here, Nevada has no state income tax. But the feds do. He took to his calculator for their cut on the $900 million lump sum: "So you're looking at roughly 356 million in tax, right off the bat."
Can you quit your job with what's left? Absolutely. Melvin doesn't know how you could spend it all in a lifetime. But he says if you do, "You got to look at how you're going to manage your time."
