Mega Millions Jackpot Hits $ 227 Million - Here’s Your Tax Bill if You Win, Crypto Coins News

TheMega Millionslottery jackpot continues to grow more tantalizing. With no winning ticket hitting all six numbers since July 23, the prize has swelled to$ 227 millionfor Tuesday night’s drawing. Feeling lucky? Here’s how to estimate your tax bill if you win the lottery tonight.

Estimating Your Tax Bill on Tonight’s $ 227 Million Mega Millions Lottery

Unfortunately, the $ 227 million jackpot figure is a bit of a misnomer because you’ll probably take home just a fraction of that amount if you play a winning ticket.

First of all, you’ll only receive the full $ 227 million if you opt to receive your winnings as an annuity spread out over 30 years . Most lottery winners opt for the cash prize, which in Tuesday’s drawing is$ 156 .5 million.

You’ll report that $ 156 .5 million on your tax return, but it won’t ever hit your bank account. Lottery officials withhold 24% of jackpot winnings for federal taxes – that’s$ 37 .6 millionfor Tuesday’s drawing – reducing your payout to$ 118. 9 million.

Here’s where lottery winners can make a catastrophic mistake if they don’t consult with a qualified tax professional before the IRS comes knocking at next year tax deadline.

How Not to Screw up When Paying Federal Tax on Lottery Winnings

You’ll take home far less than the estimated jackpot after Uncle Sam and your state tax agency take their cuts. | Source: REUTERS / Mike Segar

Although local lottery officials preemptively withhold 24% for federal income taxes, your actual tax bill will likely be much larger.

The highest-income Americans fall into the37% tax bracket, which applies to single filers making more than $ 510, 300 ($ 612, 350 for married couples filing jointly). That 13% spread between the initial withholding and the top marginal tax rate leaves you with a$ 20 .3 millionliability that you’ll be expected to rectify when you file your taxes.

Altogether, the US government will take$ 57. 9 millionof your cash prize, pushing your winnings below the nine-figure mark to$ 98 .6 million.

Of course, deductions will reduce your taxable income – to a point. Even if you maximizeyour allowable charitable contributions, Uncle Sam would still ask you to pay a small fortune when Tax Day comes

State & Local Taxes Take Another Bite (or Two!) Out of Your Lottery Winnings

Unless you live in one of nine states, you haven’t finished paying the piper yet. Your state’s lottery officials will withhold a percentage of your winnings to offset your state tax liability. However, these withholding rates don’t always line up withactual income tax rates, so the IRS might not be the only government agency ringing your doorbell to collect a slice of your Mega Millions winnings. (Another reason to consult a qualified tax expert!)

State withholding rates vary significantly. According to data fromUSA Mega, New York residents will face the heftiest cut, with winnings withheld at a rate of 8. 82%. That’s another$ 13. 8 millionyou won’t ever see, dropping your net jackpot to$ 84 .8 million.

Reside in California, Delaware, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, or Wyoming? You’re in luck! These nine states either don’t have income tax or don’t collect tax on lottery winnings.

On the other hand, it gets worse if you live in New York City or Yonkers , which impose additional withholdings of 3. 876% and 1. 323%. NYC residents will thus lose another $ 6.1 million, meaning they’ll take home about$ 78. 7 million.

However, even if local income taxes aren’t automatically withheld from your winnings, it doesn ‘t mean you won’t be responsible for them. According to theTax Foundation, nearly 5, 00 0 more jurisdictions in 17 states have local income taxes, so that’s one more thing to keep in mind before you go on a post-lottery spending spree.

State Tax Withholdings on Mega Millions Jackpot Winnings

Where you live could have a multi-million dollar impact on your potential Mega Millions jackpot winnings. | Source: one line man / Shutterstock.com

A variety of factors influence your actual state income tax rate, but this is what percentage of your winnings your state’s lottery will automatically withhold (data from USA Mega).

Alabama:No state lottery
Alaska:No state lottery
Arizona:5% (rises to 6% for non-Arizona residents)
(Arkansas:7%)
California:No state tax on lottery winnings
Colorado:4%
Connecticut:6 . 99%
Delaware:No state tax on lottery winnings
Florida:No state tax on lottery winnings

**********************Georgia:6%

Hawaii:No state lottery
Idaho:6. (%) Illinois:4. 95%
Indiana:3. 23%
Iowa:5%
Kansas: (5%)
Kentucky:5%

Louisiana:5%

Maine:5%

Maryland:8. 75% (declines to 7.5% for non-Maryland residents)

Massachusetts:5%
Michigan:4. 25%
Minnesota:7. (%)
Mississippi:No state lottery
Missouri: (4%)
Montana:6.9%

Nebraska : ****** 5%

Nevada:No state lottery

New Hampshire:No state tax on lottery winnings

New Jersey:8%

New Mexico:6%

New York:8. 82%

North Carolina:5. 499%

North Dakota:2.9%

Ohio:4%

Oklahoma:4%

Oregon:8%

Pennsylvania:3. (%)

Rhode Island:5 . 99%

South Carolina:7%

South Dakota:No state tax on lottery winnings

(Tennessee:

No state tax on lottery winnings

)Texas:No state tax on lottery winnings

Utah:No state lottery
Vermont: (6%)
Virginia:4%

Washington:No state tax on lottery winnings

West Virginia:6.5%

Wisconsin:7. 65%
Wyoming:No state tax on lottery winnings

Local Lottery Tax Withholdings for New York Residents

Mega Millions jackpot winners living in two New York jurisdictions face an additional local tax withholding, on top of their federal and state liabilities (data from USA Mega).

New York City: 3. 876%
Yonkers:1. 323%

As mentioned above, you might be responsible for local taxes if you live in one of nearly 5, 00 0 US jurisdictions, so you’re not off the hook just because lottery officials don’t withhold a percentage of your winnings to cover local income tax.

Mega Millions Jackpot Winners in 2019

Five Mega Millions tickets have hit the jackpot this year, with the winners collecting nearly $ 1.5 billion in combined nominal prizes (minus taxes, of course!). | Source: Frederic J. BROWN / AFP

Five Mega Millions tickets havehit the jackpot in 2019, with prizes ranging from $ 522 million in June to $ 50 million in March after two tickets matched all six numbers just 11 days apart.

July 23 – $ (million) $ 108 .5 million cash (won in New Hampshire
June 7 – $ (million) $ 340 .0 million cash) won in California

(March) – $ 50 million ($ 30 2 million cash) won in Kansas (March 1- $) million ($) . 6 million cash (won in New Jersey) January 1 – $ (million ($) . 2 million cash (won in New York

Altogether, Mega Millions jackpot winners have scored a combined $ 1. 45 billion this year, but that’s still less than the$ 1. 537 billionone anonymous South Carolina player won last October.

The next Mega Millions drawing will take place tonight, Sept. 24, at (PM ET.)

Last modified (UTC): September 24, 2019 8: 19 PM

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September 24, 2019 9: 00 PM