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No, you didn’t make the 520 million Mega Millions jackpot.
The biggest prize of the lottery game went up to 600 million dollars for the draw on Tuesday night, after no ticket corresponds to all the six numbers drawn on Friday night. The amount marks the 8th largest jackpot in lottery history. And the Powerball jackpot, meanwhile, is estimated at $ 470 million for Saturday night’s draw.
Of course, the advertising amounts are not what the winners would end up with. Lottery officials are required to withhold 24% of the large federal tax winnings. And this is just the beginning of what you would pay Uncle Sam and usually the state houses.
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For the $ 600 million Mega Millions jackpot, the cash option – which most winners choose instead of an annuity – is $ 442.4 million. The 24% withholding would reduce approximately $ 106.2 million before the prize reaches you.
However, you could count on more IRS debt.
The maximum share of marginal income tax is 37%. If there were no reductions in the winner’s taxable income – such as large charitable contributions – another 13%, or $ 57.5 million, it would be due to the IRS at the time of taxation (which would be April 2022 for jackpots claimed in 2021).
In total, that would be $ 163.7 million for the IRS.
State taxes would be on top. Depending on where you live, that hit could exceed 8%.
Meanwhile, for the $ 470 million Powerball jackpot, the cash option is $ 362.7 million. If there is a winner, the 24% federal withholding tax would be reduced from $ 87 million. Another 13% would be $ 47.2 million, for a total of $ 134.2 million for the tax.
Despite handing over a considerable amount to the federal and state coffers, the amount after tax would change lives. Experts say jackpot winners should gather a team of experienced professionals – including a lawyer, a tax advisor and a financial advisor – to help navigate their sudden wealth.
However, most players will not have to worry. The chance of hitting the Mega Millions jackpot with a single ticket is tiny: 1 in 302 million. For Powerball, the odds are a little better: 1 in 292 million.