The Powerball Lotto jackpot has reach a staggering $1.5 billion (roughly £1.04 billion), but don’t hold your breath if you want the lump sum.
The lucky winner will immediately lose a chunk of their new fortune, dropping the figure out of the billions.
As Benjamin Franklin said, ‘nothing is certain except death and taxes’ and it’s the taxman who is waiting to pounce on the Powerball winner.
But before the taxman even has his say, the winner must choose whether or not to take the full amount, or get paid in 30 instalments over 29 years.
The latter is the only way to receive $1.5 billion in total.
According to CNBC, if you opt for a lump sum payout the jackpot drops by 38 per cent to a paltry $930 million (roughly £644.5 million).
Melissa Labant, director of tax advocacy for the American Institute of Certified Public Accountants, has warned there will not be any concessions for the winner when it comes to the government’s cut.
If they win the jackpot, they’re going to be subject to the highest federal tax rate of 39.6 percent.
You’re not the type of consumer the U.S. government is looking to give a tax break to.
In total, 25 per cent is taken by the government off the bat, then a further 14.6 per cent disappears in federal tax come April 2017. So provided the winner is a resident with a Social Security number, the figure drops to $561.7 million (roughly £390 million).
Oh and don’t forget state taxes if you live somewhere that charges personal income tax. That could take a further 15 per cent, reducing net winnings to $422.2 million (roughly £292 million).
Well, if you are lucky enough to win, it will still change your life – just don’t go spending it all without visiting your accountant first.
An NCTJ Journalist with an MA in Sports Journalism, Kieron is an experienced social media journalist who has worked in the industry since 2015. His experience includes work with ITN, the MEN, WISH/WIRE/TOWER FM, and 8:50 Sports Digest… not forgetting his time at ASDA.