Florida lottery ticket secures $1.58 billion prize, yields $493.5 million after tax deductions: Report
1 min read 09 Aug 2023, 12:19 PM ISTThe $1.58 billion Mega Millions jackpot is reduced to $493.5 million if received as a lump sum due to taxes.
PremiumThe fortunate recipient of the $1.58 billion Mega Millions jackpot hails from Florida.
As per a report by Forbes, while the initial assumption might be that you would receive the entire $1.58 billion, that sum is applicable only if you opt for the staggered payments over a span of 30 years, equivalent to 30 annual instalments.
However, if you prefer to receive the amount all at once, the prize is reduced to approximately $783.3 million.
An immediate deduction of $187,992,000 is taken by the IRS due to the requirement in tax law for a 24% federal income tax withholding, which is promptly forwarded to the IRS. As a result, the recipient's final amount becomes $595,308,000.
Forbes highlighted that since gambling winnings necessitate obligatory federal withholding taxes, the lump sum payment is subject to a mandatory federal tax withholding of 24%, leading to a reduction of the lump sum to $595,308,000 million.
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However, it's important to note that the IRS tax rates don't cap at 24%. In reality, the federal marginal rate can escalate to 37%, contingent upon the taxable income of the recipient.
Given that the winner will undoubtedly fall into the highest tax bracket, an additional tax payment of $101,829,000 will be owed by April 15, 2024, along with their tax return for the year 2023.
As a result, the initial $1.58 billion jackpot is reduced to $493,479,000 if the winner chooses to receive the prize as a lump sum. Although this is still a substantial sum, it's a considerable decrease from the billion-dollar mark.
