Be Ready to Pay over $85 Million in Taxes if You Win the Mega Millions Jackpot on Friday

| Updated
by Tolu Ajiboye · 3 min read
Be Ready to Pay over $85 Million in Taxes if You Win the Mega Millions Jackpot on Friday
Photo: Marco Verch / Flickr

Since nobody’s ticket matched the numbers that could ensure a Mega Millions jackpot prize on Tuesday, thousands of people can’t wait for tomorrow.

On Tuesday, the Mega Millions jackpot sadly didn’t see any winners. At least a few million hopefuls were definitely disappointed that they didn’t get to take the top shot of the lottery. The good news here is that all of these people will have another shot at riches by Friday night. Piling on the good news is that the jackpot has now been increased to $340 million, easily making it the 14th largest prize in the history of the lottery after the name was changed to Mega Millions from The Big Game back in 2002. The bad news here, however, is that the winner could very easily lose 45% of all earnings to taxes.

No one had a ticket that could scoop Tuesday’s prize of $314 million and it is hoped that even though the chance that anyone ticket would pick up the prize is about 1 in 302 million, someone would walk away victorious. However, there might be a big problem. Not that anyone is unaware of taxes but they might not realize how much of a chunk taxes would bite.

According to an exec at the American Institute of CPAs’ April Walker, winners must be prepared to pay. It was stated that:

“There is still a sizable tax bill coming, for sure. Winners have to plan for any additional amount that will be due next April to the IRS and the state.”

With these lotteries, most winners immediately take the cash option, which will see the lucky person receive $230.8 million of the advertised figure. A compulsory 24% federal tax is required to be paid, crashing the cash prize by $55.4 million to $175.4 million but it doesn’t end there. Save for people who opt to make donations to charity, IRS could take 13% ($30 million), further crashing the amount. At the end of the day, the winner would have “lost” $85.4 million.

The remaining $145.4 million seems like a sizeable enough amount for anyone but there are other local and state taxes to contend with. Several states have different tax laws that could require more than 8%. At the end of the day, 45% will have been lost in no time. Still, winners are always advised to dedicate some of their earnings to hiring finance experts including tax advisors and finance attorneys for help on how to make sure the earnings make a difference and isn’t squandered.

This is the third December in a row where advertised winnings have jumped above $300 million. It began in 2017 with the prize continuously soaring until Jan. 5, 2018 when a winner from Florida received $451 million. The same thing happened again last year with the prize continuously increasing until a group of colleagues from New York got $437 million on Jan. 1, 2019.

All of these figures, however, don’t compare to the current Mega Millions jackpot in history. An unknown person from Simpsonville in South Carolina won a whopping $1.537 billion last year on Oct. 23.

News, Personal Finance
Tolu Ajiboye
Author Tolu Ajiboye

Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.

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