NEW YORK (PIX11) -- The Powerball jackpot has grown to an estimated $700 million before Wednesday night's drawing. It's the ninth-largest jackpot in the lottery's history.
If a player wins the jackpot, they will have the choice between an annuitized prize worth the estimated $700 million or a lump sum payout.
If the winner selects the annuity option, they will receive one immediate payment followed by 29 annual payments that increase by 5% each year.
If the winner chooses a lump sum payout, the $700 million jackpot will be reduced by about half to an estimated $352 million, according to usamega.com.
All taxes are taken right off the top.
- So subtract about 37% ($130,313,955), or $130 million, in total federal taxes
- New York state residents will subtract another 10.9% in state taxes ($38,400,700), leaving you more than $183 million ($183,585,345) in "net walk-away winnings."
- New York City residents must pay an additional (3.876%) local tax, further reducing their “net walk-away winnings” to about $176 million ($176,469,577).
- New Jersey residents also pay just under 11% (10.75%) in state taxes, leaving more than $184 million ($184,113,795) in "net walk-away winnings."
Dr. James Mohs, an associate professor of accounting and taxation at the University of New Haven, offered some valuable advice.
"First, hire a tax attorney. The second thing I would do is hire a financial planner. If I won, I would put the ticket in a safe, and I'd sit on it for a month or two until I figured out what I want to do. Think about what you really want to do, and then hire the pros to get it done," said Dr. Mohs.
The next Powerball drawing is at 10:59 p.m. Wednesday, Dec. 27. Powerball tickets cost $2 per play.
The odds of winning the jackpot are 1 in 292.2 million, according to Powerball.
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