The Mega Millions jackpot rises to $ 432 million. What if you win

The Mega Millions jackpot has increased.

After no tickets match the six numbers drawn on Friday, the top prize is now $ 432 million for the next draw on Tuesday night. The Powerball jackpot is $ 384 million for the Saturday night draw.

While the odds of a single ticket matching all six numbers in either game are tiny – 1 in 302 million for Mega Millions and 1 in 292 million for Powerball – it’s still worth thinking about how. which you would handle such a windfall if you had to beat the odds. .

The after-tax amount would be life changing. Experts say big lottery winners should assemble a team of experienced professionals – a lawyer, tax advisor, and financial advisor – to help them navigate the windfall.

Here are a few things that winners should consider before heading to the lottery headquarters to claim their prize.

The general advice is to prevent as many people as possible. Due to the penchant of crooks and outsiders alike in stalking lottery winners, it’s best to keep exciting news close at hand.

You may be able to protect your identity from the public, depending on the state you are in.

Only a handful allow the winners to remain completely anonymous. In others, you might be able to claim the prize through a trust or limited liability company, or LLC, which doesn’t have your name on it – but you have to plan for that.

“You really should never take money out of your own name if possible,” said Kurt Panouses, founder of the Panouses Law Group in Indialantic, Fla., And an expert in helping lottery winners.

You have the choice between receiving your earnings as a lump sum or as an annuity spread over three decades. Either way, the money will be taxed when you receive it.

Right now, federal income taxes are historically low – and it’s impossible to know where they may be in years to come. This means that from a tax standpoint, it could cost you more to take out the annuity, as tax rates are more likely to increase than decrease, experts say.

“So the question is, do you want to pay all that income tax this year, or take the money for many years without knowing where we might be taxing in 10 or 15 years,” Panouses said.

Before the windfall reaches you, 24% will be withheld for federal taxes. However, since the top marginal rate is 37%, you can count on higher debt at tax time – which would be April 2022 for prices claimed in 2021.

For the $ 432 million Mega Millions jackpot, the lump sum option is $ 329.7 million. The 24% holdback would mean $ 79.1 million going to Uncle Sam, leaving you with $ 250.6 million.

More from Personal Finance:
Workers left almost every 2020 vacation day on the table
Avoid these mistakes when dividing property in divorce
Not all end-of-life decisions are covered by a will

Assuming you don’t have any reduction in your taxable income – such as large charitable contributions – another 13%, or roughly $ 42.8 million, would be due at tax time. That would be $ 121.9 million in total for the IRS.

For Saturday night’s $ 384 million Powerball jackpot draw, the cash option is $ 295.4 million. The 24% federal withholding would reduce that amount by $ 70.9 million, with another 13%, or $ 38.4 million, payable at tax time. In all, $ 109.3 million would go to the federal coffers.

And then there are state taxes. They range from zero to over 8%, depending on where the ticket was purchased and the winner’s place of residence. In other words, you could end up paying over 45% in taxes.