How to Handle a Lottery Jackpot
One way to strike it rich is to win the lottery. While the prize is often enormous, it can also drain your income. Most players belong to the lower economic classes. Here are a few tips for handling your newfound wealth:
First, know that federal and state income taxes apply to lottery jackpots of over $600,000. The federal government will take approximately 24 percent of your winnings to pay taxes on your income. You may be liable to pay even more if you win a lottery jackpot in a smaller jurisdiction. The state tax rate can be as high as 8.95%. In addition, be aware of how to best manage your taxes. Some state lottery programs offer an annuity option for winners.
If you do win, wait until you’re ready to claim your prize. Until you’re ready to cash in, take a picture of your ticket and store it somewhere safe. Then, assemble your financial dream team. You’ll need an array of professionals who can handle such a large sum of money. Your team should include an estate-planning attorney, certified public accountant, private banker, and investment adviser. Additionally, you may want to consult an insurance expert.
In the United States, lottery winners can choose a lump-sum payout or an annuity payment. However, the latter option is less generous than the advertised jackpot amount when time value of money and taxes are taken into consideration. Depending on the state of residence, this payment option can be worth only half of the advertised amount. The AfterLotto payout calculator will provide you with an accurate picture of the actual payout after federal and state taxes are taken out.