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Powerball: Government Gets Their Piece of the Pie

by Melissa Rager

It’s that time of year when a lot of people start dreaming of a white Christmas, but I’m betting most of them are dreaming of $425 million instead.  If you’re living under a rock, that number is the current estimated jackpot in the Powerball lottery, which will be drawn on Wednesday, November 28, 2012.  And if luck is on your side, you might just beat the odds of roughly one in 175 million other individuals.  The jackpot amount is the highest in the Powerball’s history and may grow even bigger before the next drawing.    

Hopefully most of you realize the actual take home amount is not the $425 million.  The cash value is a measly $278.3 million and the winner has a choice of 30 annuity payments or the one lump sum payment.  Granted, that is a lot of money, but it’s not tax free.  Assuming there is one winner and that person chooses the lump sum payment who is also a resident of Columbus, OH, the after tax take home amount would be roughly $157 million after Federal, State and City taxes.

The end result seems quite small when compared to the initial winnings, but I think most of us could settle for $157 million and the satisfaction of beating the unfavorable odds of the game.

This entry was posted in Audit & Tax Talk and tagged Accounting. Bookmark the permalink.

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