The claim: The IRS collects $600 million of the $1 billion Powerball jackpot

A July 20 Facebook post (direct link, archived link) claims federal tax collectors are in for a big payday.

“Congratulations to the IRS on winning ~ $600 million in the Powerball lottery last night,” reads the post from the conservative website For America.

The post was shared more than 18,000 times in four days.

Our rating: False

Experts say the federal income tax on those winnings falls between roughly $200 million and $450 million, depending on whether the lottery winner takes a smaller lump sum immediately or opts to spread the full amount over time.

Winner would not owe $600 million in taxes to IRS

A single ticket sold in California matched all the numbers July 19 for the third-largest Powerball jackpot in history. The winner has the option of taking either the full $1.08 billion spread over time or a single payout of $558.1 million, according to the Multi-State Lottery Association, which runs the Powerball game.

In either case, experts say there is no way the winner will pay $600 million in federal taxes on those winnings.

“No, certainly not that I can come up with,” said Will McBride, vice president of federal tax policy at the Tax Foundation, an independent tax policy nonprofit.

Claim oversimplifies the math

In an email to USA TODAY, For America chief of staff, Sherri Francescon, pointed to a story from WTIC-TV in Hartford, Connecticut, and implied the figure in excess of $600 million is the difference between the $1.08 billion jackpot total and the $424 million cash option after tax withholding.

But as experts noted in a USA TODAY fact check of a similar claim in January, the difference between the two payouts isn’t simply that the difference goes to the government.

The upfront cash option generally represents the amount of money required to be in the prize pool on the day of the drawing to fund the estimated annuity prize, according to Powerball.

If a winner were to choose the cash option, the Internal Revenue Service automatically withholds 24% of winnings. So the winner would have about $134 million withheld and would have about $424 million to take home.

But even more taxes would then be due in Spring 2024. Those winnings would almost certainly be taxed at the highest rate of 37%, which applies to single earners with more than $578,125 in income or joint filers with more than $693,750.

That works out to another $72 million in taxes, bringing the total amount of federal income tax to about $206 million.

Opting for the annuity over the next 29 years means the winner would wind up paying around $400 million in taxes. But that amount could change if tax rates are adjusted.

“Even if they got the ($1 billion) immediately – which they don’t – the total tax bill would be a bit less than $370 million,” Steve Ellis, the president of Taxpayers for Common Sense, a nonpartisan federal budget watchdog organization, wrote in an email to USA TODAY.

When a provision in the 2018 Tax Cut and Jobs Act expires in 2025, the top tax rate will revert back to 39.6 percent. But that increase would only bring the tax total on the $1.08 billion to about $428 million.