How much of Waterloo’s $2 million Queen of Hearts drawing will the winner get to keep?
Organizers of the Saints Peter and Paul Catholic School Queen of Hearts raffle in Waterloo expect to select a winning ticket worth nearly $2 million Tuesday night.
But before the winner can deal with calls from long-lost cousins asking for money, he or she will have to answer to Uncle Sam.
The federal government will expect 37% of the prize money for income taxes with the winner jumping immediately into the top income bracket, said Julie Niemann, an analyst with Smith Moore in Clayton, Missouri.
The winner also can expect to see the first 24% of federal income taxes taken off immediately and the rest would be due with your tax return in 2024, Niemann said.
And if the winner is from Illinois, the state of Illinois would expect 4.95% in state income taxes, according to Department of Revenue spokeswoman Maura Kownacki.
That’s a grand total of 41.95% in federal and state income taxes.
So if you win $2 million in the Queen of Hearts game, you can expect to fork over $839,000 in federal and state income taxes and net a winning amount of $1,161,000.
The final jackpot amount for Tuesday night’s drawing will not be announced until then but organizers have said they expect it to be about $2 million.
The jackpot, which has been growing since March, has to be capped at $2 million because of a 2017 Waterloo ordinance that set that limit.
In the last drawing on Jan. 24, the jackpot was $1,574,218.
Advice for the winner
Dan Connors, a CPA with Buenger Accounting in Granite City, recommends the winner makes sure the tax liability has been covered and takes some time to “cool off” for a while.
Niemann also advises the winner take time to contemplate ways to spend and invest the windfall and find a professional to help them make their plans.
In her view, the winner should go to a nationally operated bank on Wednesday morning and invest the winnings in a six-month U.S. Treasury bill. This would hold the money for six months to earn interest. On Friday, the interest rate was 4.65%.
“This is going to give you six months that if anybody calls you for money, you can’t give it to them, it’s locked up,” she said. “And that’s what you need, six months to let everything cool down.”
This will give you time to seek out “good, professional advice” from a financial planner, she said.
“You’re going to go in and talk about hopes and dreams and responsibilities,” she said.
Connors and Niemann both urge the winner to meet with a “fee only” financial planner. Niemman suggests you find someone who is not “peddling products.”
Queen of Hearts raffle
The Queen of Hearts drawing will be at 7 p.m. Tuesday next to the Outsider pub at 104 S. Market St. in downtown Waterloo, where streets have been jammed with large crowds on Tuesday nights this winter for the Queen of Hearts event.
Players pick a playing card that is face down and sealed on a poster board. Whomever picks the Queen of Hearts wins the jackpot.
Normally, only one card is revealed per drawing. If the Queen of Hearts isn’t selected, then the game rolls over into another week, allowing organizers to sell more raffle tickets and enlarge the jackpot.
But since the jackpot is approaching the legal limit set by city ordinance, the raffle organizers say they’ll keep pulling raffle tickets Tuesday night until someone wins.
Tickets cost $1. However, the registration for new players ended when the jackpot crossed the $1 million threshold in December and only those previously registered can buy tickets.
Saints Peter and Paul Catholic School gets 20% of the ticket sales and the rest of the money goes to the jackpot.
A player has to be present to win the full jackpot, but gets half of the jackpot even if they’re not. The other half of the jackpot is then saved for a new round of the game.
The school has not announced what it will do with its share of the money.
This story was originally published January 30, 2023 at 6:00 AM.
