Say you win a billion dollars in the Mega Millions drawing. Then what?
An advertisement for Mega Millions, a 44-state lottery with a record jackpot of nearly one billion dollars, outside a grocery store in Washington, D.C., Oct. 18, 2018. (Photo: JIM LO SCALZO, EPA-EFE)
Despite the terrible odds – one in 302.5 million for those keeping score at home – someone will eventually match all six numbers and win the Mega Millions jackpot, which now stands at $970 million. It could happen as soon as Friday night, when the next drawing is held.
That would leave most of us disappointed but some lucky winner beset by a host of questions. Here are some answers for someone holding that prized lottery ticket for what would be the second-largest lottery jackpot in U.S. history.
I’ve won. Now what?
Lottery officials recommend winners take a deep breath, put their winning ticket in a safe spot and consult with a reputable financial planner before popping over to the lottery headquarters. Their first decision is whether to take the cash option, which would now be $548 million, or an annuity, with one initial payment and annual installments over 29 years. Nearly all winners opt for cash, but the annuity has advantages, as it reduces the tax bill a little and offers a stable flow of income that climbs by 5 percent annually.
How long do I have to claim the jackpot?
States have different rules, so depending on where you purchased the ticket, you have from 180 days to a year.
Do I get my money instantly?
No, you can’t just cash one of those oversized checks shown in all the winner photos. Payment speed also varies by state, but a week or two is common. Carole Gentry, a spokeswoman for the Maryland lottery, said the requirement is seven to 10 days in that state.
The Mega Millions jackpot is displayed as a customer leaves the Corner Market, Wednesday, Oct. 17, 2018, in Lyndhurst, Ohio. (Photo: Tony Dejak, AP)
Can I keep my name a secret?
Winners can remain anonymous in six states: Delaware, Kansas, Maryland, North Dakota, Ohio and South Carolina. In Arizona, people who win more than $600 can keep their names secret for 90 days after claiming prizes, but after that names are public record. In Michigan, winners are anonymous unless they win Mega Millions or Powerball prizes.
What about taxes?
For winners of $5,000 or more, all states automatically deduct 24 percent in federal taxes but state taxes vary widely. Some big states, including California, don’t withhold taxes from lottery winnings, and some like Texas don’t have individual income taxes at all. For the others, the state takes a bite, especially in New York, where a winner would need to pay a state tax of 8.8 percent. Residents of New York City would pay an additional tax of 3.9 percent. In general, taxes eat up nearly half of winnings.
The Mega Millions game is shown on a win station at the Corner Market, Wednesday, Oct. 17, 2018, in Lyndhurst, Ohio. (Photo: Tony Dejak, AP)
Melissa Labant, a tax policy expert at the American Institute of Certified Public Accountants, said winners should realize that while taxes are initially withheld when prizes are awarded, more money will likely be due at tax time as people suddenly are in up to a 37 percent tax bracket.
“That catches people off guard,” she said. “You have to be prepared to write another check to the IRS in April.”
What are my taxes if I don’t live in the state where I bought the ticket?
This can get complicated, but for the most part winners pay taxes where they bought the ticket and then can get a credit on their taxes in their home state. The final tax bill can depend on if the state where you live taxes at a higher or lower rate than where you purchased the ticket. Rules vary by state, so this is a good topic for that financial planner.Here are some answers for someone holding that prized lottery ticket for what would be the second-largest lottery jackpot in U.S. history.
Winner of $1.5 Billion Lottery Comes Forward (Well, Sort of. Through a Lawyer.)
An anonymous person in South Carolina finally claimed the record-setting prize from October’s $1.54 billion Mega Millions jackpot, opting to collect a one-time lump sum of $877,784,124.
The state’s lottery commission announced on Monday that the person had stepped forward, ending questions about why, five months after the winning numbers were announced, no one had claimed the money. It was the largest payout to a single lottery winner in United States history.
The winner had until April 19 to claim the money.
Winning the lottery comes with a long list of difficult decisions, which may explain the delay in making the claim. Thus far, the winner has followed the typical playbook to minimize or avoid potential complications: The person has stayed anonymous, and has gotten help.
The winner retained Jason M. Kurland, a New York lawyer who has branded himself the “Lottery Lawyer” after representing several high-profile winners. In October, Mr. Kurland told The New York Times that the biggest challenge is making sure the windfall does not ruin personal relationships.
“It’s natural there’s going to be a strain,” Mr. Kurland said. “It depends on how strong your relationships are before the lottery. If you’re really close with someone and they feel they deserve a gift, it’s really difficult. It’s one of the things winners are freaked out about when they come to me.”
The winner was fortunate to be a resident of South Carolina, one of a handful of states where winners are allowed to remain anonymous. In other states, winners have to sit through a news conference, and the publicity can attract all varieties of vultures who would look to take advantage.
The winning $2 ticket — 5, 28, 62, 65, 70; and the Mega Ball: 5 — was sold at a convenience store, KC Mart No. 7, in Simpsonville. The store’s owner, C.J. Patel, will receive $50,000.
The winner had about a 1 in 302 million shot to get it right.
The South Carolina Education Lottery Commission said in a statement that the winner “marvels at how every decision made that day brought the winner to the store, at that very moment, to make the Quick Pick Mega Millions lottery ticket purchase.” The winner had allowed another customer to make a ticket purchase in front of him or her in line, the commission said.
“A simple act of kindness led to an amazing outcome,” it said.
Lottery profits support higher education, scholarships, K-12 programs and community education programs, the lottery commission said. South Carolina will receive about $61 million in income taxes from the winner.
The winner chose the smaller lump sum over an annuity, which would have paid out the full $1.54 billion in smaller payments over 30 years. Most people take the one-time cash payment, but it is not an easy decision.The winner, who has retained a lawyer who calls himself the “Lottery Lawyer,” bought the ticket in South Carolina, one of a few states where winners may remain anonymous. ]]>