When you think of Lottery jackpot, the first thing that comes to mind is a huge pile of money ready to be raked in by a lucky winner. Huge lottery jackpots make eye-catching headlines and pique people’s curiosity about how they might become rich.

However, the reality is a little more complicated. After all, you have to pay taxes on the winnings and if you’re lucky enough to hit the big one, your taxes could eat up a significant portion of the prize.

Typically, winners of Powerball and Mega Millions can choose whether to take the lump sum or an annuity payout. If you opt for the annuity, the organizers will invest your money and you will receive payments over 29 years. While this option may seem less tax efficient than the lump sum, most lottery winners still choose to go with it.

The reason is that the annuity will give you about twice as much money over time, even after taxes. The lump sum will only get you around half as much after taxes.

While choosing how to take your prize is a personal decision, it’s important to protect the ticket and keep it away from family members and friends. Also, it’s wise to talk to a tax accountant before making any decisions about your winnings. In the end, your winnings are taxed at both the federal and state levels and you need to be prepared for the ramifications of such a large windfall.