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

The Mega Millions jackpot has risen higher.

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

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

The amount after tax can be life-changing. Experts say big lottery winners need to put together a team of experienced professionals – a lawyer, a tax adviser and a financial adviser – to help navigate the windfall.

Here are some things to keep in mind when selecting a lottery winner to claim their prize.

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

You can protect your identity from the public, depending on your state of affairs.

Only a handful let winners remain completely anonymous. In others, you can claim the prize through a trust or limited liability corporation, or LLC, which does not include your name, but you still need to plan for it.

“You should never take the money in your own 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 winning as a lump sum cash or as an annuity spread over three decades. Either way, the money will be taxed when you receive it.

At the moment, federal income tax is low from a historical point of view – and it is impossible to know where it could be years from now. This means that it can cost you more from a tax perspective to take the annuity because tax rates are more likely than to decrease, experts say.

“So the question is whether you want to pay all this income tax this year, or take the money over many years, without knowing where our tax tax could be within 10 or 15 years,” Panouses said.

Before the windfall reaches you, 24% will be withheld for federal tax. However, because the highest marginal rate is 37%, you can count on owning more on tax time – which would be April 2022 for prices claimed in 2021.

For the $ 432 million Mega Millions jackpot, the one-time option is $ 329.7 million. The 24% withholding means that $ 79.1 million goes to Uncle Sam, who will give you $ 250.6 million.

More from Personal Finance:
Workers left almost all of the 2020 holidays on the table
Avoid these mistakes when splitting assets in divorce
Not all decisions about the end of life are dealt with in a will

Assuming that your taxable income (such as large charitable contributions) has not decreased, another 13%, or approximately $ 42.8 million, would be due in tax period. That would total $ 121.9 million for the IRS.

For the $ 384 million Powerball award on Saturday night, the cash option is $ 295.4 million. The 24% federal withholding will reduce it by $ 70.9 million, with another 13%, or $ 38.4 million, owed at tax time. In total, that would be $ 109.3 million going to federal coffers.

And then there is state tax. It ranges 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.