CREDIT: FOX NEWS Thinking you'll win the big lottery tonight? Well, if you do, the IRS is going to come knocking.
Unless you've living a totally secluded life away from all media, you probably already know the Mega Millions jackpot has has done some major swelling to $1.6 billion. AND, the Powerball prize is in excess of $620 million, so while winners won’t get the awards at full value, they still stand to collect a sizable chunk of change.
Here’s how taxes will work:
With federal withholding, it is an automatic 24 percent before the winner ever receives a dime. And then there's state tax. Since you will more than likely change IRS tax brackets because of your winnings, this will place you at the very highest federal income bracket at 37 percent (for individuals with incomes in excess of $500,000).
If you take the lump sum (as most people say they would), you will have about a $904 million prize amount. The federal withholding tax reduces that by about $217 million, while the extra 13 percent hit brings the total down by another $117.5 million. Further, you can owe anywhere from $0 to $80 million in state income taxes.
In total you are likely to actually receive anywhere between $489 million and $569 million.
The Louisiana Lottery says Mega Millions sales in the boot state have reached over $23.3 million since the jackpot's initial run back in July. Fred's Truck Stop on the Louisiana/Mississippi line is feeling the pressure with every ticket sold. "Can't really put a number to it honestly," Manager Curtis Minor said. "But I can assure you this is the most we have ever sold."
Dedicated lottery buyers hope the income accumulated from sales are funded in the proper place. "Just to increase or get more tax money, and not use it wisely is a poor thing, but hopefully they will use it for the right reasons and education and kids," Todd Lewis said.
Others believe the money should be spent elsewhere.
"Maybe the Sunshine Bridge, maybe we can get that done," Joe Taylor said. "I believe if I win I will go ahead and hire somebody to fix it."
(We're not sure we believe you, Joe, but nice try.)