Mega Millions
A screenshot of the headline from a Forbes article “The $1.28 billion lottery winner…Billion Lottery Gets $433.7 Million After Tax” was posted on
“Congratulations to the IRS on getting $846. million Mega Millions Jackpot,” text above the screenshot reads.
he post received over 7,000 likes in less than a week On Instagram, similar posts have received hundreds of interactions.
True or false?
This claim messes up the math by mixing up the lump sum and long-term payouts. According to experts, a winner of that jackpot who chose the long-term payout would pay a maximum of $473 million in taxes. The taxes on the lump sum would be approximately $276 million.
The winner would not pay $846 million in taxes to the IRS.
The Forbes article was published in July 2022, following the purchase of the winning ticket in Des Plains, Illinois, by an anonymous partnership for the second-largest Mega Millions payout in the company’s history. According to Reuters, the jackpot was estimated at $1.28 billion, but it grew to $1.34 billion as people poured money in.
When a person first wins the lottery, the IRS imposes a 24% federal withholding tax. According to Gleckman, the remainder of a winner’s tax liability is determined by their tax bracket. The highest tax bracket is 37%, which applies to annual incomes exceeding $578,125 for single filers and $693,750 for married couples filing jointly.
According to William McBride, vice president of federal tax policy at the Tax Foundation, an independent tax policy nonprofit, if the winner qualified for that bracket, they would pay the IRS approximately $473 million in taxes if they chose the $1.28 billion option, and approximately $276 million in taxes if they chose the $747.2 million option.
When a person wins the lottery for the first time, the IRS withholds 24% of the winnings. According to Gleckman, the remainder of a winner’s tax liability is determined by their tax bracket. The top tax bracket is 37%, which applies to incomes exceeding $578,125 for single filers and $693,750 for married couples filing jointly.