The Powerball jackpot prize recently soared to previously unrecorded heights and one Arizona resident has come to collect. To those optimistic enough to research the tax breakdown, you’re surely aware there’s a hefty toll to pay regarding a $587.5 million prize.
As the prize is considered income, the federal and state government is entitled to the maximum taxation on the biggest lottery payouts, a percentage of 35%. Between two jackpot winners, the winnings are dwindled down from just shy of $600 million to somewhere in the neighborhood of $114 million. While that’s a far cry from the posted jackpot listing, being 1/10 of the way to billionaire status is hardly anything to scoff at.
So what should you do when you find yourself holding the lucky ticket? Experts suggest the best option remains electing for a lump sum cash payout given the fluctuations that occur with tax rates – this option cuts the jackpot winnings in half in addition to all other applicable taxes.
Previous lottery winners advise the first step you should take is hiring an experienced attorney so you don’t end up paying out more than you have to. Still, the likelihood of you ever needing to worry about any of this remains astronomically small. One statistic indicates you’re nearly twenty times more likely to win an Academy Award than hitting it big on Easy Street.