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No, you did not reach the $ 520 million Mega Millions jackpot.
The lottery’s top prize climbed to $ 600 million for the draw Tuesday night, after no ticket matched all six numbers drawn Friday night. The amount is the 8th largest jackpot in lottery history. And the Powerball jackpot, meanwhile, is about $ 470 million for Saturday night’s draw.
The advertised amounts are obviously not what winners would end up with. Lottery officials must withhold 24% of the large profits for federal taxes. And that’s just the beginning of what you would pay Uncle Sam and usually the state coffers.
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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 will shave off about $ 106.2 million before the price reaches you.
However, you can count on more credit to the IRS.
The highest marginal income tax rate is 37%. If there were no reduction in the winner’s taxable income – such as large charitable contributions – another 13%, or $ 57.5 million, would be due to the IRS in tax time (which would be April 2022 for jackpots that claimed in 2021).
That would total $ 163.7 million for the IRS.
Tax on the state would be on top of that. Depending on where you live, the hit can be more than 8%.
Meanwhile, the cash option for Powerball’s $ 470 million jackpot is $ 362.7 million. If there is a winner, the 24% federal withholding will shave off $ 87 million from the top. Another 13% would amount to $ 47.2 million, for a total of $ 134.2 million for the tax collector.
Despite handing over a significant amount to federal and state coffers, the amount after tax will be life-changing. Experts say jackpot winners need to put together a team of experienced professionals – including a lawyer, a tax adviser and a financial adviser – to help navigate their sudden wealth.
However, most players do not have to worry about it. The chance of hitting the Mega Millions jackpot with a single ticket is slim: 1 in 302 million. For Powerball, the odds are slightly better: 1 in 292 million.