IRS Could Be The Big Winner In Tonight’s Mega Millions Drawing

Many of us will buy into an office pool or stop by our favorite store and pick up a Mega Millions ticket for tonight's drawing. The jackpot in the multi-state game is $1.6 billion so even the most apathetic lottery player could have some very good reasons to want to play for tonight's big prize.

While a winner isn't guaranteed it is almost a certainty that at some point in the next few weeks someone or several someones will hit the numbers and claim the prize. Then it will be time for the real winner to step in. That would be the Internal Revenue Service.

Whether you choose to take your winnings in one lump sum or you opt to have the payments spread out over several years. Uncle Sam already knows his cut is going to be about 24% of whatever you win. In the case of a lump sum payout for tonight's lottery prize, you are looking at a tax burden of about $217 million.

But wait, there's more. Since a win of this proportion would suddenly place you in the nation's top tax bracket where the tax rate is 37% you'll have to pay for that too. The additional 13% tax burden (24%+13%=37%) will mean you owe another $117.5 million.

But keep waiting because there is still more. In addition to the federal tax burden of $334.5 million, you can bet the state's tax man will have his hand out too. There's another 8% or so of your winnings heading to Baton Rouge.

Based on some very rough calculations your $1.6 billion would actually be $904 million if you took the lump sum. If subtract the taxes you're looking at "winning" about $500 million give or take a couple of million dollars.

Granted $500 million isn't anything I would turn down but thanks to the tax man it's a far cry from $1.6 billion which what most of us are basing our fantasies on aren't we?