Whether you’ve won a big lottery jackpot or not, you need to make sure you take some steps to protect your winnings. In some cases, you may have to share your winnings with other people. You may also have to pay taxes on your winnings.
If you win a lottery jackpot, you will have a choice of receiving your prize in a lump sum or an annuity. If you choose the annuity option, you will receive your winnings in installments over the next 29 years. Depending on the state, you may have to pay state and city taxes on your annuity. In addition, you may have to pay federal taxes on the annuity amount.
If you choose the lump sum option, you will receive a percentage of the advertised jackpot. For example, if the advertised jackpot was $1 billion, you would receive half. However, you would have to pay federal taxes on half of the amount, or $43 million.
There are a variety of cautionary tales about lottery power. Some people have squandered their winnings. Others have used their fortunes to live extravagantly.
One of the most notorious examples is Jack Whittaker. He won a $314 million Powerball jackpot in 2002. He was a construction worker from West Virginia. He was known for his outsize personality and cowboy hat. He also donated money to strangers and to local restaurants and strip clubs.
Another example is Sharon Tirabassi. She assumed her winnings were “bottomless.” She used the money for an extravagant lifestyle. She bought a furnished house and went on several vacations.