Will someone finally break the pattern of lottery losers on Tuesday night and take home the $1.1 billion Mega Millions jackpot? It’s been nearly three months since anyone has won the lotto.
The odds of winning the top prize in the lottery remain the same no matter how long it takes, and they are extremely low at 1 in 302.6 million. The prize, which is currently the sixth largest in the history of the United States, will, nevertheless, be won by someone who ultimately matches all six numbers.
The winner of the $1.1 billion prize will receive their winnings in the form of an annuity, with 30 payments spread out over a period of 29 years. In most cases, winners choose to receive their prizes in the form of cash, which for Tuesday night’s drawing would amount to an estimated $568.7 million.
On Tuesday, customers at Lucky Mart located on Chicago’s South Side were holding out hope that they had won a prize.
Toni Woods, who worked for the city until she retired, stated that if she were to win, the very first thing she would do is contribute 10% of her winnings to her church.
Following that, Woods, who is now 73 years old, stated, “I’ve got a list of folks that need things, my family members, and I would take care of them.” After that, she would take a trip elsewhere.
Kirby Collins, 58, a retired firefighter from Chicago, stated that he planned to use his winnings to “travel, share with my friends and family, and assist out, you know, needy folks.” You should really just put some thought into what you do with it. I don’t want to make a fool of myself.”
The drawing is scheduled to take place on Tuesday at 11 p.m. Eastern Standard Time (EST), although it often takes a couple of hours before it is known whether there is a winner.
How much of your Mega Millions jackpot do you keep after taxes?
The jackpot, which was originally worth $1.1 billion, has dramatically decreased.
Even though tonight’s jackpot is $1.1 billion, which marks the fourth time since October 2018 that the winnings have exceeded $1 billion, the next Mega Millions winner will have to wait thirty years to become a billionaire. This is due to the fact that the odds of winning the jackpot are extremely low.
Winners have the option of taking a lesser lump sum immediately in cash or receiving the entire amount as annual payments over a period of 29 years.
If you are successful financially, what steps should you take next?
However, if there is only one winner, that person won’t be able to keep any of the money unless they pay significant taxes on it. Winnings must be reported to both federal and state tax authorities, and tax rates are determined by the total amount of income that is subject to taxation.
If you won $1.1 billion in the lottery, how much tax would you have to pay?
The vast majority of prize winners choose for the one-time cash reward, which comes to a total of $568.7 million in this instance. A single winner has the option of taking the whole $1.1 billion in the form of 30 payments spread out over 29 years.
The Internal Revenue Service (IRS) imposes a minimum federal withholding tax of 24% on lottery winnings, and this applies regardless of whatever option the player chooses. That eliminates a significant portion of the player’s options, regardless of which one they choose. In the event that the full reward of $1.1 billion was selected:
- Federal taxes: $264 million
- Take-home: $836 million (by 2051)
If the cash option, which was priced at $568.7 million, was selected:
- Federal taxes: $136.5 million
- Take-home: $432.2 million
- However, the combined state and federal tax rate is higher.
- If the winner does not qualify for any other deductions or contributions, they could be subject to the maximum federal income tax rate of 37% this year. This rate is applied to income that is greater than the following thresholds:
$578,125 for taxpayers filing as single; $693,750 for taxpayers filing as married filing jointly
If the whole payout of $1.1 billion was selected, the winner would have to pay $407 million in federal taxes and would end up with $693 million by the year 2051 if the tax rate on federal income was 37%.
If the winner chose to choose the cash option of $568.7 million, they would owe the federal government $210.4 million in taxes and would keep $358.3 million for themselves.
The Internal Revenue Service deducts 24% of winnings immediately and then takes the remaining amount when the subsequent tax return is submitted.
Winnings are subject to taxation in some states.
Only the federal taxes are included there. Winnings are subject to taxation in some states but not others. The highest tax rate in the country is found in New York, which is 10.9%. Taxes are imposed by several municipalities as well.
Which option is preferable, the complete payout or a lump sum payment in cash?
The whole amount is paid off in equal annual instalments spread out over a period of 29 years, with each instalment being 5% more than the one that came before it. The income is assured, but the following are some of the drawbacks:
It’s possible that tax rates will go up during the next 30 years.
- In the event that you pass away before all payments have been made, your estate will be subject to taxes in excess of $22 million.
- There is a risk that the entity paying payments will declare bankruptcy.
- Those who advocate for taking the windfall in one lump sum say that it can be grown through intelligent investments. The disadvantages include wasting the money or giving away an excessive amount of it.
Due to these factors, a 2018 investigation by USA TODAY suggested adopting the lump sum payment option.
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