The Powerball jackpot topped an estimated $725 million ahead of Wednesday’s drawing
becoming the seventh-largest prize in the game’s history, according to the lottery.
If you score the winning ticket, there are two choices for the windfall: an estimated $366.2 million lump sum or an annuitized prize that pays out yearly and is worth $725 million.
Before winners see a penny of the multimillion-dollar jackpot, there’s a mandatory 24% federal withholding that goes to the IRS.
The withholding applies to winnings of more than $5,000.
If you choose the $366.2 million cash option, the 24% withholding automatically reduces your cut about $88 million.
However, many taxpayers wrongly assume they’re off the hook after that 24%, Chichester said.