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Whoever holds the winning ticket to the $ 432 million Mega Millions jackpot is about to find out what a huge tax bill really looks like.
A single Mega Millions ticket sold in New York City matched the six numbers in Tuesday night’s draw for the top prize. While the bargain will be a life changing bargain, the amount advertised is not what the winner will actually end up with.
Winners can choose between receiving their prize in the form of a lump sum or an annuity paid over 30 years. For the $ 432 million Mega Millions jackpot, the cash option – which most people opt for – is $ 315 million.
However, before reaching the winner, 24% – $ 75.6 million – will be withheld for federal taxes. More would likely be due at tax time (April 2022 for wins in 2021), due to the current top marginal tax rate of 37%. (Be aware that there is an effort in Congress to increase this figure to 39.6%).
Then there are national and local taxes. In New York State, the withholding rate is 8.82%, which would mean a reduction of an additional $ 27.8 million. In addition, New York City is recouping 3.876% – $ 12.2 million – for its own coffers.
After tax withholding – a total of $ 115.6 million – the winner would end up with around $ 199.4 million, not including any additional amounts owed at tax time.
Despite the large share of taxes, the windfall is more than what most people see in a lifetime. It is therefore important to get professional advice before going to the lottery headquarters. In New York, you have one year to claim your prize.
Generally speaking, the first call should be a lawyer experienced in assisting lottery winners, experts say. Other professionals should also be brought in to help, including a tax advisor and a financial advisor.
Be aware that although New York City does not allow complete anonymity when large lottery prizes are won, the winner may be able to create a trust or limited liability company to claim the windfall, thus keeping their name out. view of the public.
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The winner must also make a copy of their ticket and keep the original in a safe place (i.e. a safe or bank safe). Plus, it’s worth sharing the news with as few people as possible, according to experts.
Meanwhile, the Powerball jackpot is approaching the half-billion dollar mark. For Wednesday night’s draw, the top prize is estimated at $ 490 million ($ 355.1 million in cash). The Mega Millions jackpot has been reset to $ 20 million ($ 14.5 million) for the next draw, scheduled for Friday night.
Your chances of hitting the jackpot of either game with a single ticket are minimal. For Mega Millions, it’s 1 in 302 million and for Powerball, 1 in 292 million.