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A lottery ticket sold in Arizona is about to change someone’s life – once the IRS takes some of the windfall, of course.
Drawing a Powerball on Wednesday night resulted in one ticket matching all six numbers drawn to win the $ 473.1 million jackpot. The amount was higher than originally expected due to strong ticket sales.
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The advertised figure is not what the winner will receive. Whether the award is taken as an annuity of 30 payments over 29 years or as an immediate, reduced amount of money, taxes ultimately consume a significant portion of the profits.
For this jackpot, the required 24% federal tax deduction would reduce the $ 283.3 million cash option – which most winning jackpots choose – by about $ 68 million.
However, the highest federal rate is 37%, so it will generally be due during taxation. For illustration purposes: If the winner did not have a reduction in income – such as significant charitable contributions from profits – another 13% or $ 36.8 million would be due to the IRS ($ 104.8 million in total).
Arizona’s state taxes will also be withheld, although the exact amount is unclear. The winner will receive 180 days to receive the prize.
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