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Uncle Sam, State Tax Offices Big Winners in Powerball Jackpot

Uncle Sam, State Tax Offices Big Winners in Powerball Jackpot
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By    |   Monday, 25 March 2019 07:20 AM

The Powerball jackpot has jumped to $750 million, but Uncle Sam and state tax collectors will take more than 45 percent of that from the person holding the lucky ticket, financial experts say.

"The big impact on winnings is taxes," certified financial planner Dan Routh, a wealth advisor at Exencial Wealth Advisors in Oklahoma City, told CNBC. "If you win, just realize how big the tax bill can be and make sure you're ready to handle it."

Winners face a 24 percent federal tax right away, whether they collect a reduced lump sum or the full prize as an annuity spread out over 30 years, and additional state taxes will likely be due.

In addition to the initial taxes, an additional 13 percent will be due at tax time, assuming there is no reduction to the winner's taxable income, meaning a total 37 percent tax bill that would take a total of $172.2 million away from the Powerball's total current prize.

That would leave $293.3 million, but state taxes of up to 8 percent will chip away at that total, depending on where the ticket was bought and the winner lives, meaning that more than 45 percent of the big prize will go to pay taxes.

Experts say it is important for the eventual winner to bring in a team of professionals including a tax advisor, an attorney, and a financial advisor to help with the jackpot.

"There's a big responsibility that goes with having such a large sum of money," Routh told CNBC.  

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The Powerball jackpot has jumped to $750 million, but Uncle Sam and state tax collectors will take more than 45 percent of that from the persont holding the lucky ticket, financial experts say.
powerball, taxes, lottery, jackpot
255
2019-20-25
Monday, 25 March 2019 07:20 AM
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