Two Powerball tickets purchased by a Massachusetts resident net a $1 million windfall
Massachusetts Resident Paul Corcoran Receives $1.4 Million After Powerball Jackpot Tax Payments
Paul Corcoran, a resident of Fitchburg, Massachusetts, became an instant millionaire after winning $2 million from the Powerball lottery on July 9. However, the joy of winning was short-lived as he faced the reality of tax payments on his winnings.
Corcoran initially believed that his first ticket was for an already declared Powerball draw. Unbeknownst to him, he had purchased two Powerball tickets with the same numbers, leading to his double win. He collected his winnings two days later at the lottery headquarters in Dorchester.
The Massachusetts Lottery posted a photo of Corcoran with his $2 million check after the July 9 Powerball draw. However, the tax man soon came knocking.
For lottery prizes over $5,000, there is an automatic federal withholding tax of 24–25%. For a $2 million prize, 25% federal tax would typically be withheld upfront from the prize amount. In addition, Massachusetts requires a 5% state tax on lottery winnings.
As a result, the tax payments on Corcoran's Powerball winnings amount to approximately $580,000 in total. After these payments, Corcoran will receive approximately $1.4 million from his Powerball winnings.
Corcoran will have to pay approximately $480,000 in federal withholding tax and around $100,000 in state tax on the lump sum. The Massachusetts state tax is on top of the federal withholding, so the winner pays 5% to Massachusetts and approximately 25% to the federal government.
The tax payments on Corcoran's Powerball winnings include $480,000 in federal withholding tax and $100,000 in state tax. After these payments, Corcoran's Powerball winnings, after taxes, amount to approximately $1.4 million.
It's worth noting that if the winnings were paid as an annuity instead of a lump sum, the payments would be spread out, and taxes would be applied yearly accordingly, which can affect tax planning but not the overall tax rates.
Despite the tax burden, Corcoran's life has been forever changed by his Powerball win. He is still deciding what to do with his reduced winnings.
[1]: [Source 1] [3]: [Source 3] [5]: [Source 5]
Despite the initial $2 million Powerball win, Massachusetts resident Paul Corcoran will only receive $1.4 million after federal and state tax payments. The tax payments on his winnings, totaling approximately $580,000, include federal withholding tax and Massachusetts state tax. [1, 3, 5]
