If you are lucky enough to be the sole winner of the $1.08 billion Powerball Jackpot, congratulations!
On Wednesday night, one ticket sold in California matched all six numbers, clinching the third-largest jackpot in Powerball history and the sixth-largest lottery jackpot in U.S. history. Powerball said the jackpot had players missing it for three months before finally hitting it in the 39th draw of the jackpot run. The winning numbers were white balls 7, 10, 11, 13, 24 and red Powerball 24.
Lucky ticket holders can choose between a $1.08 billion annuitized prize or a cash lump sum of $558.1 million. Whichever you choose, advisers say you should be aware that charging a large sum of money can also attract taxes, scammers, and friends and family. So perhaps the first and most important piece of financial advice is: no Do this if you have a winning ticket.
“Don’t scream victory from the rooftops,” said Rob Barnett, a financial and investment adviser at the Outlook Financial Center in Troy, Ohio. “If you’re lucky enough to win the lottery, keep quiet. Stay organized and plan. Consider staying anonymous if possible.”
How much was the jackpot and what were the odds of winning?
The winner can choose between an annuized prize of $1.08 billion or a cash lump sum of $558.1 million. All amounts are pre-tax. If the winner chooses the annuity option, the claimant will receive her 1 immediate payment, followed by her 29 annual payments that increase by 5% each year.
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According to Powerball, the larger Powerball jackpot will be 2.04 billion won in California on November 7, 2022 and 1.5 billion won with winning tickets in California, Florida and Tennessee on January 13, 2016. It is said that there are only two cases of 86 million won.
According to Powerball, the odds of hitting the jackpot on Wednesday are 1 in 292.2 million. To put this into perspective, the National Weather Service says you’re 250 times more likely to be struck by lightning than to win the lottery, but according to Madison, the odds of being born with this exact version of you are about 1 in 400 Trillion The Trust Company is a voluntary retirement account company. “So you might be really lucky,” it said.
Why can’t we let everyone know?
Six “losers” of the lottery who lost their winnings due to various investment scams and poor management, saying that whoever won “will be immediately flooded with investment offers from financial planners, scammers, friends and family.” Attorney Andrew Stoltman, who has represented them, said: “Winners will probably be the biggest targets of banks, brokerage houses and scammers around the world. Ultimately nobody should be trusted. There is.”
Powerball also advises players that “the lottery never asks you to pay a fee to receive a Powerball prize. is high and you should not share personal or banking information.” with those entities. “
Steve Azzurley, owner of Azzurley Financial in Troy, Michigan, told many lottery winners, including the $181 million winner, “If I didn’t know you before, I don’t want to know now. I advised him,” he said. “”
If you can’t tell everyone you won, what can or should you do?
Purchase a safe and keep your tickets safe. “Until a lottery ticket is presented to a lottery official, a winner is not truly a legal winner,” Stoltman said. “If a ticket is lost or damaged, the winner is legally out of luck.”
Then, “Get a tax accountant and a tax accountant right away, then a financial adviser adviser,” says Azzurry. “They will work together to come up with a plan.”
A plan includes payment options that you choose.
- The annuity option has an initial annual payment followed by 29 annual payments. Each payment is 5% more than the last.
- A cash option is a one-time lump sum payment equal to all cash in the jackpot prize pool.
Azouri said the plan should also include Fall Guys. “It’s about the person or advisor who tells people that you don’t lend to anyone and that all money is tied up in investments and unavailable. No, and I’m not interested in your project.”
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Also, because the amounts are too large to be covered by FDIC insurance, the winnings are deposited into brokerage accounts with large broker-dealers such as Merrill Lynch and Goldman Sachs, initially in short-term US Treasuries until more concrete investments are made. should be invested. Stoltman said a decision can be made.
Should I pay in full or in installments?
That decision depends on your goals, your age, and what the lottery’s rules are for beneficiaries to keep getting paid, or whether you might be wasting your lump sum.
Jackson Hewitt’s chief tax officer, Mark Steever, recommends considering the following:
- Lottery Winnings: It serves as a guide for determining the taxes you have to pay and the financial security you’ll get out of it. If the amount is small, a lump sum payment may be easier.
- Current and Expected Income: Consider your lifetime earning potential and tax rates. Will the earning potential for a single payment outweigh the amount earned during the annual payment period?
Stoltman advises taking the prize in installments. “More than 90% of winners receive an immediate lump sum, but at least not at first,” he said. “By spreading out the payouts, the winners can learn the lessons of investing over time and apply those lessons. It’s not fatal, though.”
How much do you want to bring home?
That depends on how you receive your money and complicated state laws.
If you win the lottery, you could be pushed to the highest tier of federal tax. Your state of residence and where you purchased your winning ticket will greatly affect the state taxes you pay.
For example, if you’re a California resident and buy a ticket there, you’ll pay a federal tax rate of 37%, but you’re lucky that lottery winnings aren’t taxed in California, Steever said. That means this Powerball winner doesn’t have to pay state taxes.
But New York has the highest tax rate on lottery winnings.
But if you’re a California resident and decide to buy a ticket in Rhode Island while on vacation, you’ll be obligated to pay federal taxes and possibly some California state taxes, he said. .
However, if a California resident vacations in Rhode Island and decides to purchase a ticket there, they may include the lottery winnings on their federal tax and California tax returns and You must file a resident tax return. jackpot. To avoid double taxation, you must claim the Rhode Island tax credit on your California return. While it’s unlikely that you pay taxes on the same income in two states, the inner workings of tax matters in multiple states can be complex. Said.
“This is where tax professionals really help,” says Stever. “State taxes can be very tricky.”
How long will it take to receive my money if I win?
Azouri said it shouldn’t take too long once you receive your prize. “It will probably take weeks,” he said.
Remember that most people do not receive their winnings immediately as it takes time to plan. Billing periods vary by jurisdiction, so you should check with the state lottery agency where you purchased your ticket to obtain the billing period that applies to your ticket.
The lottery says Powerball claim periods range from 90 days to a year from the draw date, but vary by jurisdiction. The expiration date is often printed on the back of the ticket.
Medora Lee is USA TODAY’s Money, Markets and Personal Finance Correspondent. Please contact firstname.lastname@example.org. Subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday-Friday morning.