How Harford Powerball winners’ $108.8 million became $43.4 million
The Harford County couple who recently won the multi-state Powerball jackpot has not gone public, but they did receive their winnings, according to state lottery officials.
Their check worked out to about 40 percent of what the Powerball publicity machine touted they had “won,” when the single winning ticket was announced following the Sept. 7 drawing.
The money was still big, of course, just not so big as it might have seemed to the casual observer.
And, as might be expected, the government was waiting to claim its take for taxes.
In the first big Powerball win for Maryland, the couple from Abingdon purchased a ticket at Wine World in Abingdon with the numbers 3, 5, 18, 27, 54 and Powerball 13, bringing in the $108.8 million jackpot.
Given the option for a $108.8 million annuity, which, after taxes, works out to be approximately $1.2 million per year for 30 years, or the $65.2 million lump sum choice, the couple chose to take home the cash, and the Maryland Lottery gave them a check for $43.4 million, according to Carole Everett, the Lottery’s director of communications.
An earlier news release from the Maryland Lottery stated the jackpot as $107 million and the cash option at $64.2 million. Following the final ticket sales calculations, however, the jackpot amounted to $108.8 million annuity with a $65.2 million cash option, Everett said.
With large payouts, according to Everett, both the federal government and state of Maryland receive a portion of the prize money through taxes withheld from the winner’s share.
The federal government gets 25 percent of the $65.2 million cash jackpot, or approximately $16.3 million.
The state “top marginal [income tax] rate” for 2011 is 5.5 percent, according to Christine Duray Feldmann, deputy director in the office of communications for the Comptroller of Maryland. Added to the 5.5 percent is Harford County’s 3.06 percent local income tax rate, giving Maryland the ability to tax 8.56 percent overall, or almost $5.8 million.
Maryland will collect the tax for both the state and the county, Feldmann said, and make estimated payments to Harford County on a quarterly basis, along with other income tax revenue.
Based on a 3.06 percent local income tax rate, Feldmann estimated Harford County would be eligible to receive up to $1.9 million from jackpot, but would not necessarily end up getting the entire amount immediately. Income tax revenue is paid by the state to counties on a quarterly schedule based on historical data, Feldmann said, and after an adjustment period.
A number of things could affect the amount of money Harford County receives from the Powerball win, including if the state had over-distributed in the last quarter or if the Abingdon couple claims allowable losses and other deductions on their winnings, which Feldmann suggested they would.
“[They] most likely have played the lottery before,” she said, adding that would make them eligible to report losses against the winnings.
In simple terms, however, Feldmann reiterated, Harford County has the possibility of receiving up to $1.9 million from the jackpot and can spend it however it wants.Harford County could get up to $1.9 million in income tax from a recent Powerball jackpot win in Abingdon. ]]>