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There is a chance that someone with a Mega Millions ticket is on their way to becoming one of the richest people in America.
The jackpot for Tuesday night’s draw is $ 345 million (flat-rate cash option: $ 234.6 million). While you might dream of what you would buy with cash if you hold a ticket, it’s also worth thinking about how you would handle a deal of this magnitude.
Of course, your chances of winning the top prize are tiny: the chance of a single ticket matching all six numbers drawn is 1 in 302 million.
Nonetheless, at some point – whether it’s Tuesday night or later, if the jackpot goes up – there will be a winner.
If you can beat the odds, here are the key considerations and what to do first.
Do not rush
Protect the ticket and your identity
You should also make a copy of your banknote and put it in a safe place, that is, in a safe or a safe in a bank. Also, be sure to check your state’s laws on allowing lottery winners to remain anonymous – some do, some don’t.
Be aware that while the standard advice is to sign the back of the ticket, it may interfere with remaining anonymous if your state requires that the winner’s name be made public. In this case, you may be able to set up a trust or a limited liability company to claim the windfall instead of doing so on your own behalf.
Plus, resist the urge to share the news with everyone in your life right away. Experts recommend keeping the circle of knowledgeable people as small as possible.
It’s also worth bringing in experienced professionals who can walk you through the claims process and help you plan a financial plan for the money. This team should include a lawyer, a tax advisor and a financial advisor.
Lump sum or annuity
For that $ 345 million jackpot, you would have a choice of either the $ 234.6 million cash option in a lump sum or an annuity paid over 30 years.
Most winners choose to go with a lump sum, which can make the most financial sense.
“Taking the lump sum gives you more control over that money,” Boneparth said.
However, he said, know yourself.
“If you lack discipline when it comes to investing and spending, or don’t want to deal with it, that’s when the annuity kicks in,” Boneparth said.
The tax bite
You can expect to pay a lot – a lot – in taxes.
Assuming you went with the lump sum of $ 234.6 million for that Mega Millions jackpot, the 24% federal withholding tax required on your win would net you $ 56.3 million right off the bat. That would leave you with $ 178.3 million.
However, you can also count on a much higher debt to Uncle Sam. The top marginal income tax rate of 37% applies to income above $ 523,600 for individual filers and 628,300. $ for married couples declaring jointly.
State taxes – which can also be partially or fully withheld – are also due.