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

The Mega Millions jackpot has risen higher.

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

While the chance of a single ticket hitting all six numbers in any game is minuscule – 1 in 302 million for Mega Millions and 1 in 292 million for Powerball – it is still worth considering how you would handle such unexpected luck if you wanted to beat the odds. .

The after-tax value would be life-changing. Experts say the big lottery winners must bring together a team of experienced professionals – a lawyer, a tax advisor and a financial advisor – to help navigate the windfall profits.

Here are some things that winners must consider before going to the lottery headquarters to claim their prize.

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

You can protect your identity from the public, depending on the state you are in.

Only a handful allow the winners to remain completely anonymous. In others, you can claim the prize through a trust or limited liability corporation, or LLC, that doesn’t have your name on it – but you need to plan for it.

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

You can choose to receive your earnings as a single amount of money or as an annuity spread over three decades. Either way, the money will be taxed when you receive it.

At the moment, federal income taxes are historically low – and it is impossible to know where they will be in a few years’ time. This means that, from a tax standpoint, it can be more expensive to take the annuity, because tax rates are more likely to increase than decrease, experts say.

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

Before the unexpected profit reaches you, 24% will be withheld for federal taxes. However, as the higher marginal rate is 37%, you can count on a larger debt at tax time – which would be April 2022 for the premiums claimed in 2021.

For the Mega Millions $ 432 million jackpot, the fixed amount option is $ 329.7 million. The 24% retention would mean $ 79.1 million going to Uncle Sam, leaving you with $ 250.6 million.

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Assuming that you have no reduction in your taxable income – like large charitable contributions – another 13%, or about $ 42.8 million, would be due at the time of tax. That would be $ 121.9 million in all going to the IRS.

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

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 may end up paying more than 45% in taxes.