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No, you did not hit the Mega Millions jackpot of $ 520 million.
The top prize of the lottery game has soared to a whopping $ 600 million for Tuesday night’s draw, after there was no ticket matching all six numbers drawn Friday night. The amount marks the 8th largest jackpot in lottery history. And Powerball’s jackpot meanwhile is an estimated $ 470 million for Saturday night’s draw.
Of course the advertised amounts are not what the winners would get. Lottery officials are required to withhold 24% of big winnings for federal taxes. And that’s just the beginning of what you’d pay to Uncle Sam and, most of the time, to the treasury.
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For the Mega Millions jackpot of $ 600 million, the cash option – which most winners choose instead of an annuity – is $ 442.4 million. The 24% withholding would shave about $ 106.2 million before the price hits you.
However, you can count on owing more to the IRS.
The highest marginal income tax rate is 37%. If there were no reductions on the winner’s taxable income – such as large charitable contributions – an additional 13%, or $ 57.5 million, would be due to the IRS at the time of tax (this would be April 2022 are for jackpots claimed in 2021).
That would total $ 163.7 million, to the IRS.
State taxes would come on top of that. Depending on where you live, that hit could be more than 8%.
Meanwhile, for Powerball’s jackpot of $ 470 million, the cash option is $ 362.7 million. If there is a winner, the 24% federal withholding would shave $ 87 million off the top. Another 13% would be $ 47.2 million, for a total of $ 134.2 million for the tax authorities.
Despite a significant amount being transferred to the federal and state treasury, the after-tax amount would change lives. Experts say jackpot winners should assemble a team of experienced professionals – including a lawyer, tax and financial advisor – to help navigate their sudden wealth.
However, most players don’t have to worry about it. The odds of winning the Mega Millions jackpot with one ticket are miniscule: 1 in 302 million. For Powerball, the odds are slightly better: 1 in 292 million.