Powerball jackpot soars to $550 million. Right here’s the tax invoice
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The Powerball jackpot has just jumped again.
With no ticket matching all six numbers drawn on Saturday night, the grand prize for the Wednesday night drawing has increased to $ 550 million. The Mega Millions jackpot is even higher: an estimated $ 600 million for the Tuesday night draw.
Of course, the amounts shown are not what the winners would end up with. Lottery officials must withhold 24% of large winnings for federal taxes. And that’s just the beginning of what you would pay Uncle Sam and usually state coffers.
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For Powerball’s $ 550 million jackpot, the cash option that most winners choose instead of an annuity is $ 411.4 million. If there is a winner, the 24% withholding tax would cut $ 98.7 million off the top.
However, you can be rest assured that you owe more to the IRS.
The highest marginal tax rate is 37%. If the winner’s taxable income were not reduced – such as B. large charitable donations – an additional 13% or $ 53.5 million would be payable to the IRS at tax time (this would be April 2022 for jackpots claimed in 2021).
That would be a total of $ 152.2 million that would go to the IRS.
State taxes would be additional. Depending on where you live, this hit can be more than 8%.
The cash option for the $ 600 million Mega Millions jackpot is $ 442.4 million. The 24% withhold would mean about $ 106.2 million going to the IRS initially.
Another 13% would be 57.5 million For the tax officer a total of $ 163.7 million.
Despite handing over a substantial amount to federal and state coffers, the post-tax amount would be life changing. Experts say jackpot winners should assemble a team of seasoned professionals – including a lawyer, tax advisor, and financial advisor – to help manage their sudden fortune.
Most gamers don’t need to worry, however. The chance of hitting any of the jackpots with a single ticket is slim: 1 in 302 million for Mega Millions and 1 in 292 million for Powerball.