Searching for the big lottery winner: Tax man awaits $50 million of it. | Arkansas Blog

Monday, April 3, 2017

Searching for the big lottery winner: Tax man awaits $50 million of it.

Posted By on Mon, Apr 3, 2017 at 10:05 AM

click to enlarge WINNER SOLD HERE: Valero in Stuttgart. - KATV
  • KATV
  • WINNER SOLD HERE: Valero in Stuttgart.
As yet, no one has emerged to claim the $170 million MegaMillions lottery ticket prize due someone who purchased the winning ticket last Thursday at a Valero station in Stuttgart.

The winner has 180 days to claim the prize. On one this big, it's not unusual for people to get a legal counseling in advance. But there's not much way to get around the tax man.

Some notes on that:

The winner can take the prize in an annuity. Most choose the lump sum payment, in this case $107 million.

And what will the tax man get? The lottery typically takes 32 percent of a big lottery prize up front, but in this tax category, that's not nearly enough to cover the tax bill.

Here's what the published tax brackets require for your average married person filing a joint tax return on income of $107 million:

State income tax: $5,021 plus 6.9 percent of the amount over $86,000 (or $106.9 million) Total tax, absent potential itemized deductions: $7.482 million.

Federal income tax: $131,628, plus 39.6 percent of the amount over $470,700 (or $106.529 million): $42,185,602.

So the total tax bite, state and federal, would be $49,667,691 on this mythical taxpayer.

Rounded off, they'd be left with a paltry $57 million.

It's hell being rich.

From Arkansas Lottery news release:

Lottery Director Bishop Woosley is encouraging the winner to call the lottery headquarters prior to coming to the Claims Center in Little Rock to collect the prize money.

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