Mega Millions jackpot jumps to $ 432 million. What to do if you win

The Mega Millions jackpot has gone up.

After no ticket matched all six numbers drawn on Friday, the top prize is now $ 432 million for the next Tuesday night draw. The Powerball jackpot is $ 384 million for Saturday night’s draw.

While the odds of a single ticket matching all six numbers in both games are miniscule – 1 in 302 million for Mega Millions and 1 in 292 million for Powerball – it’s still worth considering how to deal with such a windfall. would go if you beat the odds. .

The after-tax amount would change lives. Experts say big lottery winners should assemble a team of experienced professionals – an attorney, tax and financial advisor – to help navigate the windfall.

Here are some things winners should consider before heading to the lottery headquarters to claim their prize.

The general advice is to tell as few people as possible. Due to the tendency of scammers and strangers to track down lottery winners, it’s best to keep the exciting news close.

You may be able to shield your identity from the public depending on what state you are in.

Only a handful allow winners to remain completely anonymous. In other cases, you may be able to claim the prize through a trust or limited liability company, or LLC, which does not have your name on – but you need to plan for that.

“You should never take the money in your individual name if possible,” said Kurt Panouses, founder of Panouses Law Group in Indialantic, Florida, and an expert in helping lottery winners.

You can choose between receiving your winnings as a fixed amount in cash or as an annuity spread over three decades. Either way, the money is taxed when you receive it.

Right now, federal income taxes are low from a historical standpoint – and it’s impossible to know where they will be years from now. This means it could cost more from a tax standpoint to take the annuity, as tax rates are more likely to rise than fall, experts say.

“So the question is whether you want to pay all of this income tax this year, or take the money with you over many years without knowing where we can be for tax purposes in 10 or 15 years,” Panouses said.

Before the windfall gets to you, 24% is withheld for federal taxes. However, since the top marginal rate is 37%, you can count on paying more at the time of tax – which would be April 2022 for prices claimed in 2021.

For the Mega Millions jackpot of $ 432 million, the option is suddenly $ 329.7 million. The 24% deduction would mean $ 79.1 million will go to Uncle Sam, leaving you with $ 250.6 million.

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Assuming you had no deductions from your taxable income – such as large charitable contributions – an additional 13%, or about $ 42.8 million, would be due at tax time. That would total $ 121.9 million to the IRS.

For the Powerball jackpot draw of $ 384 million on Saturday night, the cash option is $ 295.4 million. The 24% federal withholding would reduce that by $ 70.9 million, with an additional 13%, or $ 38.4 million, due at tax time. In total, that would be $ 109.3 million to the federal treasury.

And then there are state taxes. They range from zero to more than 8%, depending on where the ticket was purchased and where the winner lives. In other words, you could end up paying more than 45% in taxes.