Taryn Phaneuf, NerdWallet
The Mega Millions jackpot has risen to approximately $ 1.02 billion ahead of the next draw on Friday 29 July. A billion dollars is not an easy number to understand, and it has only happened twice before in the history of Mega Millions.
If you want to have a chance to hit the jackpot, here’s what you need to know.
How to buy a Mega Millions lottery ticket
Mega Millions can be played in 45 US states, plus Washington, DC and the US Virgin Islands. Players can purchase as many $ 2 tickets as they want. Each ticket requires you to choose five numbers between 1 and 70 and a sixth number between 1 and 25 (or you can let the lottery people generate the numbers for you). The jackpot goes to the person (or people) who correctly select all six numbers.
Your chances of doing so are around 1 in 303 million.
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How Much Could You Win?
Every Mega Millions jackpot winner has the option to take cash now in a one-time payment or receive a portion of their winnings annually for 30 years.
For the $ 1.02 billion jackpot, the cash option is $ 602.5 million.
If you chose the annuity option instead, you could get about $ 15.3 million for your first payment. So each one after that increases by 5%. If you die before all annual payments have been made, the rest will be sent to your heirs.
Each option has its pros and cons, Lisa Kirchenbauer, founder and president of Omega Wealth Management in Arlington, Virginia, and a certified financial planner, said in an email.
Kirchenbauer also said that anyone who suddenly finds himself rich should put together a team of professionals, including a lawyer, accountant and financial planner.
“Your team will help you decide which option is best for you,” he said. “It’s not a one-size-fits-all decision.”
How lottery winnings are taxed
If you win a billion dollars in the lottery, you definitely owe federal income tax on it. For starters, according to the IRS website, 24% of your winnings are withheld. The amount depends on whether you have opted for the cash or annuity option, since you only pay tax on what you receive in a given year.
If you take the money all at once – remember, that’s about $ 602.5 million – you’d see $ 144.6 million taken off the top, leaving you with $ 457.9 million.
In April, you should probably pay additional federal income taxes, as well as state income taxes, depending on where you live.
What to do if you win
While it’s something we’ve probably all dreamed of, no one is ready to hit the jackpot. If you do, protect your ticket. Anyone in possession of a winning lottery ticket can apply for the prize.
So, consider your anonymity. Each state has its own laws regarding the possible public identification of lottery winners. Keeping your name out of the news and telling as few people as possible protects you from scammers and long-lost “friends” who want to get back to you.
The key is to slow down, Kirchenbauer said. “Don’t start spending money before you have time to plan and think.”
Is $ 790 million worth a $ 2 Mega Millions ticket? It depends
Introduction
Is $ 790 million worth $ 2?
That’s a good question, as it costs $ 2 to purchase a Mega Millions lottery ticket that could pay off with an estimated $ 790 million prize, the nation’s fourth-largest jackpot, following the game’s next draw on Tuesday night.
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Isn’t that an obvious question?
Not really.
For starters, your chances of winning the top prize are slim, one in 302.5 million. You have better odds of a smaller payout, such as winning $ 1 million for matching five regular numbers but missing the Mega Ball. But even that is one in 12.6 million. To put that into perspective, your chance of dying in a car accident – something to consider while driving to the mini-mart for a lottery ticket – is about one in 101 over a lifetime, according to the National Safety Council with no purpose. for profit.
As lottery officials note, players should think of their $ 2 wager as an opportunity to dream as they accept the reality that they likely won’t enter a new income tax bracket on Tuesday night.
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However, a hit at $ 790 million appears to be worth $ 2
Ah, but even if you somehow beat the odds you won’t get $ 790 million.
First, this is the amount for the winners who choose the annuity option, paid over 30 annual installments. But the winners almost always opt for cash, which would pay around $ 464.4 million for this draw.
And then there are federal taxes, which will cut 37% off the prize money, so they would leave less than $ 300 million, though state taxes could reduce that amount as well, depending on where the winner lives. Still a fortune, but a lesser fortune. This also doesn’t take into account the possibility of someone else matching the winning numbers, which means they should split even those smaller winnings in half or more, depending on the number of lucky players.
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Nearly $ 300 million is not small change
It’s definitely a big paycheck.
To put that into perspective, consider that the median U.S. household income in 2020 was $ 67,500, meaning a working life at that rate would be less than 1% of even the smallest after-tax jackpot.
But sadly, if you had won the same award a year ago, before the nation endured a year with an inflation rate of around 9%, your purchasing power would have been significantly higher.
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But someone will win
In the end, although the reason why the top prize has grown so much is because no one has matched all six numbers since April. There are 28 consecutive draws without anyone winning the jackpot.
With so many people playing now that the potential jackpot is so big, it becomes more and more likely that one or more players will put an end to that streak. However, past prizes have risen, as the biggest payday was a $ 1.586 billion Powerball jackpot won in 2016.
Mega Millions is played in 45 states plus Washington, DC and the US Virgin Islands. The game is supervised by state lottery officials.
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So, is $ 2 worth betting?
If you enjoy dreaming of a huge windfall that most likely won’t blow you away, buy a ticket. But if you need to keep an eye on your money, consider keeping the $ 2 in your wallet.
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What are the 10 biggest US lottery jackpots ever won?
DES MOINES, Iowa (AP) – The Mega Millions jackpot has risen to $ 1.1 billion, making it the fourth largest lottery prize in the nation. Here’s a look at the 10 biggest US jackpots that were won and the states where the winning tickets were sold:
1. $ 1.586 billion, Powerball, January 13, 2016 (three tickets, from California, Florida, Tennessee)
2. $ 1.537 billion, Mega Millions, October 23, 2018 (one ticket, from South Carolina)
3. $ 1.05 billion, Mega Millions, January 22, 2021 (one ticket, from Michigan)
4. $ 768.4 million, Powerball, March 27, 2019 (one ticket, from Wisconsin)
5. $ 758.7 million, Powerball, August 23, 2017 (one ticket, from Massachusetts)
6. $ 731.1 million, Powerball, January 20, 2021 (one ticket, from Maryland)
7. $ 699.8 million, Powerball, October 4, 2021 (one ticket, from California)
8. $ 687.8 million, Powerball, October 27, 2018 (two tickets, from Iowa and New York)
9. $ 656 million, Mega Millions, March 30, 2012 (three tickets, from Kansas, Illinois and Maryland)
10. $ 648 million, Mega Millions, December 17, 2013 (two tickets, from California and Georgia)
The Mega Millions article: How a Billion Dollar Jackpot Actually Works originally appeared on NerdWallet.
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