Good News for the IRS

After an absolutely horrible week, things may be looking up for the IRS. The odds overwhelmingly suggest that someone is going to discover in the next 24 hours that they owe the US Government something north of $150,000,000.00 (that's 40% of $376 million).

If you’re lucky enough to win the upcoming $600 million Powerball, you’ll also be putting a big smile on Uncle Sam’s face.

And when it comes time to give the tax man his share, your total bill will have a lot to do with which state you live in.

For example, if you buy a ticket and live in Florida, you'll pay less than if you live in New York; Florida does not collect state tax on lottery winnings. A New York City Powerball winner can expect to pay about $197.1 million – or more than half of a $376.9 million lump sum payment – in federal, state and city taxes.

The tax bite happens in stages. The very day you cash in your winning ticket you'll be hit with a withholding that is deducted immediately from your payout. Then, next April, you’ll pay whatever additional tax you owe based on the bracket you’re in after you add up all your other earnings.

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