The Powerball jackpot rises to $ 550 million. Right here is 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 – which 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 – would be an additional 13% or $ 53.5 million 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 a jackpot with a single ticket is tiny: 1 in 302 million for Mega Millions and 1 in 292 million for Powerball.

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