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Ask Mr. Answer Person: Your Iowa Lottery expert!

Posted: Wed, Jul 10, 2013 4:02 PM

(With the news that 80-year-old Don Johnson of Decorah has won $2 million from the Iowa Lottery, Mr. Answer Person has been busy answering questions).

Al asks: "So how much is a $2 million lottery ticket actually worth?

Mr. Answer Person says: "Iowa Lottery winners have to pay both federal and state taxes on their winnings.  So the Iowa Lottery withholds some money and holds it in escrow so the money is available to pay those taxes.

Iowa Lottery officials say they will withhold 25 percent of the earnings to cover federal taxes and 5 percent of the earnings to pay state taxes.  On $2 million in winnings, that represents $500,000 in federal tax withholding and $100,000 in state tax withholding.  Of course, lottery winners have to file income tax returns, so their final payments to the state and federal governments will be determined by numerous factors."

Mike says: "You said Don Johnson had to go to Des Moines to pick up his winnings.  But there's an Iowa Lottery regional office in Mason City that's much closer."

Mr. Answer Person says: "Yes, the Mason City office is closer, but the Iowa Lottery requires winners of all major prizes to pick up their checks in person in Des Moines.  The winner--in this case, Don Johnson--will be invited to a news conference and will be photographed holding one of those REALLY BIG checks.

Steve asks: "So, Mr. Answer Person, what would YOU do if you won $2 million?"

Two words--"research assistants!"

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