A quick stop at Winn-Dixie turned into a life-changing moment for Edwin Scroggin from Lake City, Florida. After purchasing a $30 scratch-off ticket, Scroggin defied the odds and landed a massive $1 million prize in the 300X The Cash game. With odds of 1 in nearly 2 million, the win was a stunning surprise.
However, Scroggin soon faced an important decision that would determine how much of his prize he’d actually take home. According to the Florida Lottery, winners of large sums must choose between receiving the full amount over time in installments (annuity) or accepting a smaller lump sum payment upfront. Scroggin opted for the lump sum, walking away with $695,500, but this decision meant losing more than $300,000 of the original prize.
Tax Impact on Lottery Winnings
The reduction in Scroggin’s prize is largely due to federal taxes. Any lottery winnings over $5,000 are subject to an automatic 24% federal tax withholding by the Internal Revenue Service (IRS). Fortunately, Florida does not impose a state tax on lottery winnings, which helped soften the financial blow. Other states, such as New York, tax lottery winnings by more than 10%, making the overall tax burden even greater for winners in those locations.