Powerball Lottery Tops $200 Million Jackpot — Here’s The Tax You’ll Pay If You Win
The Powerball lottery jackpot pushed its way past the $200 million mark after no ticket hit all six numbers in Wednesday’s drawing, the 12th straight Powerball drawing without a jackpot winner. The jackpot of $203 million on the line Saturday night will mark only the eighth time out of 90 Powerball drawings this year that the nationwide lottery game has offered a jackpot topping $200 million.
Largest Powerball Jackpot of 2014 Was $425.3 Million
The $203 million Powerball drawing will happen just four days after one ticket holder in upstate New York won what is now calculated as a $326 million jackpot in Powerball’s sister lottery game, Mega Millions. That prize was the largest Mega Millions jackpot ever won by a single player.
The largest Powerball jackpot of this year was won on February 19 by Raymond Buxton, who bought a ticket in Milpitas, California, that turned out to be worth $425.3 million, the sixth-largest United States lottery jackpot, and fourth-largest Powerball jackpot, ever.
When You Win The Powerball Jackpot, Plan On Paying $80 Million In Tax
But if you’re planning on winning that tempting $203 million Powerball jackpot on Saturday, you should know that even if you elect to take the full amount of the advertised prize in 30 annual installments, there’s no way you’ll ever see that much money. The U.S. government makes sure of that.
In fact, thanks to the U.S. congress and the “fiscal cliff” deal it pushed on President Barack Obama, you’ll pay more in federal tax on your lottery winnings now than if you had won a big jackpot just two years ago.
The fiscal cliff deal raised the top tax rate from 35 percent to 39.6 percent. So if you got all six Powerball numbers on Saturday, expect to write a check to the Internal Revenue Service for more than $80 million.
IRS Takes 25 Percent Off The Top, But Doesn’t Stop There
But wait, you’re probably thinking. Doesn’t the government just take a standard 25 percent off the top of big lottery winnings?
The answer is yes — but that’s not all they take. The 25 percent is just the withholding amount — assuming you have a Social Security number of tax ID. No tax ID, Uncle Sam slices 28 percent off the top.
But that doesn’t mean you don’t owe the remainder. You do and and you will — unless you can come up with some pretty clever tax shelters to protect what’s left of your winnings from federal taxes.
And unless you live in California, Delaware, Florida, New Hampshire, Pennsylvania, Puerto Rico, South Dakota, Tennessee, Texas, Washington, or Wyoming, you’ll be paying state taxes on your winnings over and above what you owe the feds.
Wednesday’s Winning Powerball Numbers Pay Out Over $8 Million
But don’t worry. Even after taxes you’ll still have millions left over. For that matter, Wednesday’s Powerball lottery gave away more than $8 million, without a jackpot winner. Here are the winning numbers.
2 — 11 — 19 — 21 — 42 Powerball 34
If you take your Powerball winnings on Saturday in a single payment, the jackpot will pay $126.7 million. Before taxes, of course.
