COSTLY MOVE
I ‘couldn’t believe’ I won the $1m Powerball lottery – but I immediately lost thousands when I cashed in my prize
Other lottery winners have lost even more
A LOTTERY player recently won big after buying a Powerball ticket.
However, after winning $1 million on the lottery, the man lost a heavy chunk of his prize.
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The 45-year-old Delaware winner chose to remain anonymous, but the state’s lotto said he lived in Rehoboth Beach.
He bought the ticket at a local Wawa.
Using a quick pick option, he allowed the lottery machine to assign him random numbers.
He matched five of those numbers in the drawing on April 6.
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The winner told lotto officials he shared the news with his mom first.
“I couldn’t believe I won. I thought a friend was playing a joke on me,” he said.
“I plan to put some of the winnings towards paying off my house, buying my mom a car, and taking [a] small family vacation.”
However, he couldn’t keep all of his prize money.
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The lottery did not disclose exactly how much the Rehoboth man lost.
It is possible that he, like most winners, chose to take the lump sum prize.
This pays out all at once, but is a smaller amount than the full $1 million.
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That’s because the sticker prize on most lottery games refers to the amount you win if you take an annuity, which pays out over many years.
One of the disadvantages of a lump sum is that it can lead to a heavy tax burden.
Winnings are taxed as income at both the state and federal levels.
Delaware’s income tax varies based on total income, meaning the Rehoboth winner could have lost anywhere between 2.2% and 6.6% of his prize.
Delaware Lottery says it must also withhold 24% of any prize over $5,000 to go toward federal income tax.
Depending on tax brackets, winners may need to pay Uncle Sam even more afterward.
MORE LOSSES
While it’s unclear how much the Delaware winner lost, other winners show the impact taxes and individual choice can have on a lottery prize.
A $2 million winner in New York lost nearly $700,000.
However, that state has steep taxes on lottery winnings.
A beekeeper from North Dakota recently won $1 million from a scratch ticket in Florida.
Luckily, Florida doesn’t tax winnings, but he still lost over $300,000 to the federal withholding and his choice of lump sum.
Read More on The US Sun
There are only weeks left to claim a $25,000 “for life” prize.