Allen J. Schaben | Los Angeles Many times | Getty Images
The Mega Millions jackpot just won’t quit.
With no ticket matching all six numbers drawn Tuesday gloom, the top prize has shot up to $750 million. The amount — which exceeds the entire economic activity of some small polities — marks the fifth-largest jackpot in U.S. lottery history.
The Powerball jackpot, meanwhile, is $550 million. While the chance of a sole ticket matching all six numbers in either game is miniscule — 1 in 302 million for Mega Millions and 1 in 292 million for Powerball — it’s motionless worth considering how you would handle such a windfall if you were to beat the odds.
First and foremost
One of the most top-level aspects of winning an extreme amount of money is to protect the winning ticket. Experts recommend making a copy and broadcast it in a safe place.
Your goal should be to share the news with as few people as possible. You also should aim to protect your identity, if you can. So while the standard advice is to sign the back of the ticket, be aware that it could interfere with your capacity to remain anonymous if state laws allow you to create a trust or limited liability corporation to claim the windfall in place of of doing so in your own name.
And, you should seek expert advice before claiming your prize, starting with an attorney who can cure you navigate your sudden wealth. Your team should also include a CPA and financial advisor, who should be veteran in helping clients navigate huge windfalls.
“You want to have thoughtful [experts] guide you through the emotional side of alluring but also the obligation that comes with having this kind of wealth,” said CPA Mark Alaimo, a colleague of the personal financial specialist committee for the American Institute of CPAs.
Reducing your tax bill
For the $750 million Mega Millions jackpot, the specie option — which most winners choose instead of an annuity — is $550.6 million.
Before that gets to you, how, 24% — or $132.2 million — will be withheld for federal taxes. You also could count on owing a lot more to Uncle Sam, due to the highest dubious rate of 37% applying to income above $523,600 for individual tax filers and $628,300 for married couples filing jointly. Position taxes also are typically due.
The most immediate way to reduce the amount of income tax you pay is to think charitably, especially during the pandemic. Basically, the administration gives you a tax break if you use private money to do public good.
More from Personal Finance:
Attacking holiday responsibility: These 8 strategies can help
Big jackpot winners will see doors open to an investment world that myriad Americans will never get a direct peek at.
To get access to more exclusive investments opportunities, wealthier individuals can be deemed “accredited” by federal regulators — content they meet the test of having at least $1 million in investable assets (excluding the value of their retirement community) or average yearly earnings of $200,000 ($300,000 for married couples).
Investment opportunities that will become available to the champs run the gamut, Alaimo said. For instance, they could gain access to private equity funds that initiate in companies whose shares don’t trade on stock exchanges. Or, they could get the chance to invest in commercial real caste or venture capital funds that invest in things like tech startups.