Don't Mess With Taxes

Why do lottery jackpots seem to grow on already big gambling days? Does God just like tempting all of us with quick riches?

In March 2013, a big Powerball jackpot and March Madness coincided. Two months later, Powerball and the Preakness converged.

Then May 2, 2015, was a major betting day, with American Pharoah looking to take the first leg of horse racing's big title (he won then and the other two, too, becoming the last Triple Crown champ), a boxing match between Floyd Mayweather and Manny Pacquiao in Las Vegas, and national Hockey League and National Basketball Association championship series all making things interesting in the gambling world.

It's happening to a degree again today.

NY horse race overshadowed by Powerball: Horse race fans are putting their money down on the Belmont Stakes, although the lack of a Triple Crown winner has dampened the enthusiasm for the casual bettor.

But there's always the hope that our — yes, the hubby and I bought a Powerball ticket — numbers will come up in tonight's drawing.

Since there was no big winner in Wednesday's (June 7) drawing, the Powerball jackpot has grown to $435 million. It will likely be even bigger by the time of the drawing with late-playing lottery hopefuls adding to the pot.

But even now it's pretty darn big. It's already the 10th-largest jackpot in U.S. history and the eighth-largest Powerball drawing.

If your $2 Powerball ticket does pay off — and you have a 1 in 292.2 million chance of that happening — remember that you'll owe Uncle Sam taxes on the money.

Millions won, millions in taxes: If you take it as a lump sum payment, you'll owe a federal tax bill on what's estimated right now to be $273.1 million. Or you can choose an annuity, which pays off over 29 years, taxes due on each of those annual payments.

Remember, too, that if you live in a state that collects and taxes gambling winnings, you'll owe that local tax collector, too.

Lottery site USAMega.com calculated the federal tax bill on the lump payout to be $68.3 million. At the state level, it could be more than $24 million if you live in New York, the Powerball participating state with the highest tax rate. Check out the website for all the state lottery tax estimates.

Since most folks opt for the single big check, the more than $68 million estimated Internal Revenue Service tax bill is this week's By the Numbers figure.

There's no state income tax here in Texas, so I'd get a tax break there. But I'm more than happy to pay the U.S. Treasury tax on any amount I might win tonight.

I'm sure you are, too. Good luck!

And if you do win, check out the first link below.

You also might find these items of interest:

• 5 tax tips for lottery winners
• Don't bet on fooling IRS with bought losing lottery tickets
• Reporting your Super Bowl, and other gambling, winnings to the IRS