WASHINGTON (Reuters) - The odds of winning the $640-million “Mega Millions” lottery are estimated to be 175 million-to-1, according to its sponsors, but for the Internal Revenue Service, it’s a sure thing.
No matter who wins the largest lottery jackpot in world history, the IRS is certain to score a 25-percent cut.
The tax-collecting agency subjects lottery winnings of more than $5,000 to a 25-percent federal withholding tax.
If a single ticket matches all six winning numbers, the player would receive either a one-time payment, pegged at $462 million late on Friday, or the full jackpot in annual payments.
The winner will not definitely know the full tax cost until next tax season. Most states apply a withholding tax, too.
Buyers can purchase the $1 Mega Millions tickets in 42 states, the District of Columbia and the Virgin Islands.
The drawing will be held in Atlanta on Friday night. If there is no winner then, another drawing will occur.
Reporting By Patrick Temple-West; Additional reporting by David Beasley; Editing by Kevin Drawbaugh