You'll Be Shocked At The Tiny Sum The $564 Million Powerball Jackpot Winners Each Got
/Three Americans became winners of the third-highest Powerball jackpot in history - $564.1 million - in Feb 2015.
The three winning Powerball tickets were sold in Texas, Puerto Rico and North Carolina.
You might think that the three winners would simply split the $564.1 million three ways and each get a cool $188 million. In reality, says Elyssa Kirkham who writes for GOBankingRates.com, the winnings were as little as $69.5 million.
And there's a bigger surprise. One winner will get $57.5 million more than the others.
It's down to the choice each winner makes about how to receive their win.
The $564.1 million is the amount that a Powerball winner would get if they chose to receive their winnings in annuities - known as yearly checks - rather than a lump sum.
Most lottery winners opt for a lump sum, but it means receiving less money to get all of their winning total at once.
The difference between payout in annuities and lump sum is pretty stark.
Annuity: $564.1 million
Lump sum: $381.1 million.
Before taxes there is a difference of $183 million.
Splitting the lump sum figure three ways, each winner would receive $127 million.
But that's the gross winnings before income taxes are accounted for. Here's a look at what these Powerball winners will actually net...
When it comes to taxes, the winner from Puerto Rico definitely comes out on top. This U.S. territory pays no federal income tax, so it's unlikely this winner would have to pay any of the winnings to the IRS, reports CNN Money.
According to USAMega.com, Puerto Rico does not charge a local income tax for lottery winnings either, therefore, this lucky winner wins again by getting to keep the full $127 million without paying any taxes on it.
For the winners in Texas and North Carolina, however, federal income tax would still apply to the $127 million over, with nearly all of it being taxed at the highest rate of 39.6 percent. This would result in a tax bill of $50.27 million for the winners, which would leave Powerball winners $76.78 million after federal income taxes are taken out.
But state income taxes also need to be paid. Texas doesn't have a state income tax, so the winner in this state will keep the full $76.78 million after federal income taxes.
But in North Carolina, the income tax is a flat 5.75 percent rate, which on the $127 million would be $7.31 million paid to the state of North Carolina. This puts the North Carolina winner's take-home winnings at just $69.47 million.
Here's the final numbers of what each winner nets on the Powerball winnings once all the federal and state income taxes owed are taken out:
Puerto Rico winner: $127 million
Texas winner: $76.78 million
North Carolina winner: $69.47 million
These numbers do not include standard deductions and other taxes that might change the winners' tax burdens.
But the lesson is clear - despite the three winners receiving the same initial payout, the Puerto Rico winner will end up with an astounding $57.5 million more than the North Carolina winner.
