How this calculator works
Canada mode assumes an ordinary personal lottery prize, generally not taxable on receipt; income later earned from investing it is separate. US mode estimates incremental 2024 ordinary federal income tax over other income plus a supplied effective state/local rate. It holds 2024 tax rules fixed for every annuity year and excludes credits, nonresident rules and gambling-loss deductions. Withholding is not final tax. Payments occur at each year-end; the cash option is received now. Custom flat rates apply independently to the same gross base.
Formula
Cash option = advertised prize x cash percentage. Growing annuity first payment = prize x growth / ((1 + growth)^years - 1), or prize / years at zero growth. Present value = sum of net payment / (1 + discount)^payment year. US incremental tax = tax(other income + prize payment) - tax(other income).
Worked example
For a Canadian $1,000,000 prize paid in 20 equal annual instalments, each payment is $50,000. A 50% cash option is $500,000. With a 0% discount rate and no tax, total net annuity is $1,000,000; at a positive discount rate its present value is lower.
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Frequently asked questions
Are Canadian lottery prizes taxable?
Ordinary personal lottery winnings are generally not taxable, but business-related gambling, employment prizes and investment income can receive different treatment.
Is US withholding the final tax?
No. Final federal tax depends on total annual income, filing status and other return items. The worksheet estimates incremental tax rather than using withholding as liability.
Can I compare growing payments?
Yes. The payment growth rate increases each annual payment while keeping the sum of gross payments equal to the advertised prize.