The mega jackpot of $ 510 million: Here’s the tax

Mega Millions award went up to $ 510 million This week, after no winner was announced during Tuesday’s drawing.

The mega prize is the eighth time the jackpot has exceeded $ 500 million.

The game officials also noted that three of the biggest Mega Millions prizes were won in January.

However, after the IRS collects a large chunk of the winnings, the award will be significantly smaller.

“ Strain the jackpot ” cut lottery ticket sales and cut prize money

The winning ticket owner faces two options: either take the money in the form of a lump sum or an annual payment, which will be paid out over a period of about 30 years.

Under the cash option, which is the most popular option, the jackpot is subject to the federal discount, which is 24% immediately before the winner receives a cent. So in this case, the total amount of winnings would be estimated at $ 377.4 million before taxes.

This would reduce the award value by $ 90.5 million.

The IRS will also likely charge earnings in the highest federal income bracket, which is 37% for people with incomes over $ 500,000. The winner will be indebted for any remaining difference between this tax rate of 37% and the federal withholding rate of 24% when the winner submits tax returns at the end of the year, which will deduct another $ 49 million.

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This means about $ 139.5 million will be deducted from federal taxes and the total grand prize value of roughly $ 238 million.

Depending on where the winner lives, the grand prize can also be subject to state taxes at rates ranging from 8.82%.

Gains are not subject to the 3.8% net investment income tax.

If the winner plans to donate money, they are allowed to donate up to $ 15,000 to as many people as they wish without tax consequences.

The next draw will be held on Friday.

Aileen Morales

"Beer nerd. Food fanatic. Alcohol scholar. Tv practitioner. Writer. Troublemaker. Falls down a lot."

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