With the Powerball jackpot’s lack of a grand prize winner has sparked the creation of 67 millionaires in the past two months. As of Tuesday morning, the pot has increased to $1.4 billion — the highest ever lottery prize in the United States. Numbers have been drawn for the Powerball grand prize 19 times, with the bouncing balls being selected once again on Wednesday.
The massive rush to get Powerball jackpot tickets could likely cause the pot to increase beyond the $1.4 billion threshold before tomorrow night. The “smaller” prize winners have seen their bank accounts swell since November 7. A total of 59 winning tickets with at least some of the Powerball jackpot numbers matched have been drawn, and earned the holder $1 million each. Another eight tickets with an even closer matching string of numbers garnered the holders $2 million each, CNN reports.
Even when you lose you can still win. https://t.co/dGGjXXqAte
— Mix 94.1 (@Mix941) January 12, 2016
The bulk of the 67 millionaires were bounced into a higher tax bracket during the most recent Powerball drawing over the weekend. All gambling winnings over $600 are subject to income taxes, meaning Uncle Sam and the government will be taking a sizable chomp of the funds. Lottery winners in the second tier or lesser prize category in the Powerball game do not have the option of taking the annual payments options and must accept a single lump sum payment of their winnings. The grand prize winner can opt to receive a winnings payment each year for 30 years.
When a smaller amount is awarded to the ticket holder on an annual basis, the tax bite is typically a lot less painful. Donating some of the winnings to charity is not only a nice thing to do, but will help defer at least a small portion of the bill handed down during tax season.
— WCCB, Charlotte’s CW (@WCCBCharlotte) January 11, 2016
As previously reported by the Inquisitr, the El Gordo lottery in Europe is the current record holder for the highest lottery prize money ever distributed. In December, the jackpot was hit and garnered the winner $2.4 billion.
The taxman takes 39.6 percent of all taxable income, including prize money. The amount shown on the gigantic check the winner holds on television is not the same amount that the person with the lucky ticket will receive. The federal government immediately withholds 25 percent of the Powerball jackpot from the winner, with the remaining percentage due on tax day in April, USA Mega reports.
USA Mega broke down the lump sum versus annual payment a Powerball jackpot winner would be given. If one person hits all the number correctly, he or she (or a group that went in on tickets together) should expect to received $37,500,000 annually after federal taxes, or a lump sum payment of $697,500,000. The amount will go down further when state and/or local taxes are assessed on the lottery winnings.
After the IRS takes a piece of the prize money, local tax collectors will come with their hands out. A total of 44 states sell Powerball tickets, and nearly all of them take a cut of the jackpot when the winning ticket is sold in their state. New Jersey residents will lose less of their winnings to state tax departments. Governor Chris Christie’s state boasts the lowest tax rate, at 3 percent. New York has the highest tax rate, and will take 8.82 percent of the Powerball winner’s purse. Due to city taxes, if a NYC residents wins the mega jackpot, her or she will only see about 40 percent of the amount printed on the big cardboard check.
Are you going to play the Powerball? What will you do with the money if you win?
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