If someone hits the $448 million jackpot in Wednesday night’s Powerball drawing, Uncle Sam will be waiting in the wings with both palms out.
While the odds of winning the top prize are stacked against players, the IRS — and often the state where you live — wastes no time getting at least a slice of every big lottery win.
“Winners are surprised by how much is withheld in taxes from the initial payment, and then how much more is owed when they file their taxes the following year,” said Jason Kurland, a partner at Rivkin Radler, a law firm in Uniondale, New York.
“All of the numbers involved in these huge jackpots are staggering, and the taxes are no exception,” said Kurland, who helps big lottery winners navigate their windfall.
The chance of winning the Powerball jackpot — which has been climbing since late December — is about 1 in 292 million.
Of course, at some point, there will be a jackpot winner. And whether the person takes their prize as an annuity spread out over three decades or as an immediate reduced lump sum, lottery officials are required to withhold 24 percent for federal taxes.
However, the top marginal tax rate of 37 percent means the winner would owe a lot more.