It has been announced that someone has claimed the $910 million Mega Millions prize. Here is an estimate of how much the winner may have to pay in taxes.
If someone is able to match all six numbers that will be drawn on Friday, they will be awarded a substantial sum of money; however, this amount will be reduced due to federal and state income taxes.
The odds of winning the Mega Millions jackpot of $910 million are almost one in 302 million, but whoever does take home the money would almost certainly be required to make significant tax payments.
Officials from the lottery have stated that if someone wins all six numbers in the drawing that will take place on Friday, they will have the option of receiving a lump sum payout of $464.2 million or 30 years’ worth of payments that will be distributed over time.
After taking into account both federal and state income taxes, however, these figures become a great deal less significant.
To begin, a report from CNBC states that 24 percent of the windfall will be sent directly to the Internal Revenue Service (IRS) to cover taxes that are required to be paid. Therefore, if the winner opts for the cash payout, the prize amount will be reduced by more than $111.4 million, bringing the total amount they would get down to around $352.8 million.
The winner might then fall into the highest federal tax band, which, according to CNBC and Forbes, is currently 37% of their total taxable income if they have a particularly high level of income overall. If that is the case, CNBC reports that you would most likely owe an additional 13% in taxes when you file your tax return for the year 2023.
According to Forbes, if the federal marginal rate of 37% were to be used in conjunction with the installment plan, the annual payments of around $30.33 million might be reduced to $19.1 million.
The person who wins the Mega Millions jackpot will almost certainly be required to pay taxes on the money whenever they receive it.
A lottery winner in Ohio is subject to a tax rate of 3.99%, whereas a winner in New York is subject to a tax rate of 8.82%. According to Cox Media, residents of New York City and Yonkers would have to pay an even higher price.
According to Forbes, some jurisdictions, including Florida, Texas, and California, do not treat winnings from the lottery as taxable income.
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The prize pool for this week’s Mega Millions drawing, which will take place on Friday, is one of the largest in the game’s whole history. There have been four jackpots that have been greater than one billion dollars, including one in January.
Over the course of the past few weeks, significant numbers have popped up in a variety of lotteries besides only the Mega Millions.
Related: the weirdest regulations that jackpot winners of Powerball and Mega Millions must follow, which you were unaware of before reading this.
This past month, the Powerball jackpot of $1.08 billion was won by a single ticket that was purchased in the city of Los Angeles.
“There is a new Powerball BILLIONAIRE in the Golden State of California!” On Twitter, officials from the California Lottery shared their thoughts. “A lucky ticket that was sold at Las Palmitas Mini Market in Los Angeles was the only one in the country that matched all six numbers in the Powerball drawing that took place on July 19 and won the $1 billion jackpot.”
Although the lucky winner has not yet stepped forward, there is no rush for them to do so at this point. According to the law of the state, the person who wins the drawing has one year from the date of the drawing to collect their prize.