When a Taxpayer Wins the Jackpot, So Does the IRS

Jackpot
Jackpot

When it comes to Powerball jackpots and the IRS, like the one that is currently topping $320 million, the first thing that a tax attorney thinks about, if he isn’t the lucky winner, is how much the IRS and state tax boards will receive once winners come forward to claim their reward. There are several parts to that answer.

IRS shares in Jackpot

The first is where you purchased your ticket, as the 44 jurisdictions who participate have differing criteria. Some of the 44 jurisdictions, which include a total of 42 states, do not have a state income tax, and in at least one, lottery winnings are an exemption from the tax. A resident of the state would only owe the IRS 35% if he or she were the sole recipient of the jackpot.

 

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