Of course, the two winners splitting the $687.8 million Powerball jackpot won’t end up with the advertised amount. Whether they take their haul as a lump sum or as an annuity spread out over three decades, federal and state taxes will eat up a big chunk of their windfall.
“Winners are surprised by how much is withheld in taxes from the initial payment, and then how much more is owed with 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.
If the winners go with the immediate lump sum payment, they would each start with $198.1 million (versus the $343.9 million they’d each get if they were to choose the annuity). The federal government will shave off 24 percent right off the bat — and more will be due at tax time.