[ad_1]
Seven-time lottery game grand prize winner Richard Lustig gives tips for winning Mega Million and Powerball jackpots.
The Mega Millions jackpot soared to $ 510 million this week, after no winner was declared in Tuesday’s draw.
The massive prize is just the eighth time the jackpot has exceeded $ 500 million.
Game makers also noted that three of Mega Millions’ biggest prizes were won in January.
However, once the IRS takes its share of the winnings, the price will be significantly smaller.
SALE OF CUT-OFF LOTTERY TICKETS “ JACKPOT FATIGUE ”, REDUCTION IN PRICE AMOUNTS
A person with a winning ticket is faced with two options: taking the money as a lump sum or paying an annuity, which would be paid out over a period of about 30 years.
Under the cash option, which is the most common choice, the jackpot is subject to federal withholding, which is immediate 24% before the winner receives a dime. So in this case, the lump sum of the earnings would be valued at $ 377.4 million pre-tax.
This would reduce the prize amount by approximately $ 90.5 million.
The IRS would also likely tax the earnings on the highest federal income bracket, which is 37% for people with incomes over $ 500,000. A winner would be expected to make any difference between that 37% tax rate and the 24% federal withholding rate when the winner files tax returns at the end of the year, which would deduct an additional $ 49 million.
CLICK HERE TO GET THE FOX BUSINESS APP
This means that approximately $ 139.5 million would be deducted from federal taxes and the flat-rate jackpot would be worth approximately $ 238 million.
Depending on where the winner lives, the jackpot could also be subject to state taxes with rates of up to 8.82%.
Gains are not subject to the 3.8% net investment income tax.
If the winner intends to donate money, he or she is allowed to give up to $ 15,000 to as many people as he or she wants without tax consequences.
The next draw will take place on Friday.
[ad_2]
Source link