If you bought a $2.00 Powerball ticket when the jackpot jumped to $699.8 million this week, sorry, you’re out 2 bucks.
That’s because there was a single winner of the mega fortune. The person bought the ticket at an Albertsons in Morro Bay, California, and he or she now will be cashing in her ticket on the seventh largest U.S. lottery jackpot of all time.
So, the good news is that winner can take care of their next three generations below them if they want, assuming they aren’t stupid enough to blow it all.
The bad news is Uncle Sam will be knocking on the door with his hand out, and it’s going to take a convoy of Brinks trucks to take care of the looming tax bill.
The winner will be taxed by the IRS who wants their cut, and most likely at the state level too.
Here’s the nitty gritty details of what’s looming for the lottery “winner.”
If they take the lump sum, one-time payment they will get a check for $496 million. That means the federal government will hold on to about $120 million of it.
Because the ticket was sold in California, the winner is off the hook on state taxes on that massive prize. That would save $30-$45 million, depending on what state the winner could have lived in.
But wait, there’s more. That’s just the up front taxes that would be owed on the lump sum. The winning prize is income that would be taxed the following year, by both the IRS and the state of California, and a nine figure payout like that qualifies the winner to be in the 37% tax rate.
If the winner took the annuity payments, they would receive $23.3 million for the next 30 years. Roughly $5.6 million would be taken for federal taxes, and the remainder would be taxed annually at 37%.
Whoever the lucky winner is needs to add three important people into their life immediately; a financial advisor, tax expert, and estate planner.
Bottom line is it would be one heck of a great problem to have to deal with.