What does a $448M lottery jackpot mean to the IRS? Segal Cohen & Landis reviews Robert Wood’s Forbes article.
So far three Powerball winners-two in New Jersey and one in Minnesota have won the multistate lottery’s massive jackpot. The pot was originally at $425 million, but a frenzy of last-minute ticket buying pushed the jackpot up to $448 million. The biggest Powerball jackpot in history however was a $590 million win in Florida. The odds against hitting Powerball’s six-number jackpot are long, over 175 million to one.
According to Mr. Wood at Forbes the $448M jackpot means quite a bit to the IRS. Not only is paying tax on your winnings not an option, as an IRS Form W-2G will report your winnings, but you can also count on paying up to 39.6% of your winnings. Even if you wanted to give all your money to charity charitable contribution tax deductions are usually limited to only 50% of your income and in some cases less. Therefore, you might still have to pay tax on half of the money.Segal, Cohen & Landis
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