- If this jackpot is won, it will be the fourth lottery prize awarded that is worth more than $1 billion.
- The cash option — which most jackpot winners choose instead of an annuity — is $602.5 million.
- The IRS will take a big chunk of the windfall, and state taxes would likely be due as well.
One way to reduce your tax bill is to think charitably, according to the American Institute of CPAs: You can contribute cash, up to 60% of your adjusted gross income, to a public charity or a donor-advised fund and get a tax deduction for the amount in the year you make the donation. You could also create a private foundation, donate income to it and then determine over time how to deploy the money.
If you had no reduction in income, another 13%, or $78.3 million, would be due to the IRS ($222.9 million in all).
That would reduce the windfall to $379.6 million.
There also could be state taxes either withheld or due. Unless you live where there’s no income tax or lottery wins aren’t taxed, those levies could be more than 10%, depending on where you bought the ticket and where you live.
Nevertheless, even after a big tax bill, the windfall would be more than most people see in a lifetime. It’s recommended that jackpot winners assemble a team of professionals to help navigate the claiming process, including an attorney, financial advisor and tax advisor.
Meanwhile, the Powerball jackpot is an estimated $145 million for Wednesday night’s drawing. Your chance of winning the top prize in that game is about 1 in 292 million.
