The United States of America has accumulated some of the largest jackpot winnings from a lottery game. Indeed, it appears that lottery players have been successful at taking home record-setting prizes over the years.
When a player wins a large prize, all of their lottery winnings will be subject to Federal taxation. This means it automatically is reported to the Internal Revenue Service, but the winnings have to be at least $600.
Depending on where you live, some of the smaller jurisdictions also have various taxes. The IRS requires a minor withholding of 25 percent of the prize, subtracting the wager, of any gambling winnings that are in excess of $5,000.
However, the net amount for a large prize often is misleading. This is because players that win typically owe the IRS more money upon filing a return since the Federal withholding was lower than the winner’s tax obligations were.
Looking back at the earlier versions of these large jackpot games, some of these U.S. state lotteries were actually “annuity only” options. These lotteries eventually introduced a “cash option” or a lump sum amount to be taken instead of a long-term payout for these games.
Since there has been a higher rate of growth, one annuitized jackpot can have a higher cash value than compared to a larger annuitized jackpot that has a lower cash value. For example, even though both the Mega Millions’ and the Powerball’s annuities have the option to be paid out in 30 annual installments, the Mega Millions’ has annuity payments that increase five percent yearly.
When looking at the Powerball annuity payments, they increase theirs at four percent yearly. This allows the Mega Millions’ annuity installments to be somewhat more “inflated.”
The prizes that are listed below are pre-withholdings and are the annuity amount. This means that this is taxable income that the player has to report on their tax returns in order to be subject to taxation.
This list of U.S. lottery drawings also has a value of at least $300 million or more when looking at the annuity value and has at least one jackpot-winning ticket.
Below is a look at the 10 largest U.S. jackpots. You will see the locations of the winning prizes and the states where the winning tickets were sold at: