Taxes and Winning a Lottery Jackpot

lottery jackpot

Winning a lottery jackpot is one thing, but holding onto it is a different story. Having the right legal and financial team is crucial to keeping your prize and your finances in order. You will need an experienced attorney to help you claim your prize and structure your assets in a way that makes sense for you. You will also need a licensed financial advisor to help you manage your investments and reach your financial goals. You will most likely be approached by several different advisors, so take your time choosing the right ones.

Mega Millions is currently the third-highest lottery prize in the history of the United States. The lucky winner paid just $2 for their ticket, and they can choose to get their $780.5 million in a lump sum or in installments over 30 years. However, the prize comes with a hefty tax bill. The government will withhold 24% of the prize, and winners may have to pay state income tax on top of that. In Illinois, lottery winnings are taxed at 4.95%, but winners in higher-tax states may owe more than that.

Most lottery winners must pay taxes on their winnings. The IRS taxes the majority of prize winnings as income. If you win more than $600, you will have to pay Federal taxes on the entire amount. In addition, many smaller jurisdictions also levy taxes. Your taxes will depend on the state you live in, but the total amount you owe could be as high as 50 percent of your prize.