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Powerball jackpot soars to $550 million. Right here’s the tax invoice

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Justin Sullivan | Getty Images

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.

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