Powerball jackpot is still up for grabs. What to do if you win.
Here’s why you shouldn’t tell anyone if you win the Powerball jackpot.
Just the FAQs, USA TODAY
- The Powerball Jackpot has climbed to $1.6 billion.
- That means it could be an exciting night for a lucky winner with the drawing set for 10:59 PM ET on Saturday.
- If you win, you’ll likely want to tell everyone. But advisers say it’s best to keep mum.
What should you do with $1.6 billion?
The Powerball lottery jackpot ballooned to $1.6 billion after no one matched all six numbers on Wednesday night to win the top prize.
Claiming that much money likely will draw taxes, grifters, and friends and family members, advisers say.
All that attention means the first and most important piece of financial advice likely is what you should not do if you hold the winning ticket.
“Don’t shout your win from the rooftop,” Rob Burnette, financial and investment adviser at Outlook Financial Center in Troy, Ohio, said. “If you’re lucky enough to win the lottery, keep it quiet. Get organized and make a plan. Consider staying anonymous, if it’s a possibility.”
How much is the Powerball jackpot, when is the drawing and what are my chances of winning?
The $1.6 billion prize is for winners who choose the annuity option, which pays 30 graduated payments over 29 years. Most winners opt for the lump sum cash option, which is $782.4 million for the next drawing on Saturday at 10:59 PM ET.
The single chance of matching all six numbers is 1 in 292.2 million. Powerball tickets — which cost $2 each — are sold in 45 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands.
Rate hike squeeze: Live updates: Massive Fed interest rate hike coming today. Here’s what you need to know.
Shore up finances: Another mega interest rate hike is coming. What this means for your finances.
Why shouldn’t you tell anyone if you win jackpot?
Scammers.
Lotteries will never contact you via email, telephone call, or Facebook to inform you that you’ve won a prize, unless you specifically entered an official lottery promotion or contest, Powerball says.
Don’t fall for it: Stay alert against financial scams
Winning streak: ‘We did it again’: Maryland mom wins $100K jackpot for third time in five years
Also remember, lotteries never require you to pay a fee to collect a prize. “If you are asked to pay a fee to claim a prize, you are likely being scammed, and you should not share any personal or banking information with those entities,” Powerball said.
Steve Azoury, owner of Azoury Financial in Troy, Michigan Mich., said he has advised many lottery winners, including a $181 million winner “who said ‘If I didn’t know you before, I don’t want to know you now.’”
What should you do if you win the Powerball jackpot?
“Get a tax attorney and a tax accountant right off the bat and then a financial adviser,” said Azoury. “They’ll work hand in hand to figure out the plan.”
The plan will include which payout option to choose:
An annuity option makes an initial annual payment followed by 29 annual payments. Each payment is 5% larger than the previous one.
The cash option is a one-time, lump-sum payment equal to all the cash in the Powerball jackpot prize pool.
The plan also should include a “fall guy,” Azoury said. “That’s the person or adviser who keeps you from giving loans to anybody, who tells people all the money’s tied up in investments, not available. We have nothing available to help you out and we’re not interested in your project.”
Something to celebrate: A 70-year-old woman celebrated winning the lottery by buying another ticket. She won again.
Save to win: Missing Mega Millions mania? Try prize-linked savings to party on. Here’s how they work
Should you take the lump sum or installment payments?
That decision depends on your goals, your age, and what lottery rules are for beneficiaries to continue receiving payments, or if you’d likely squander a lump sum.
Mark Steber, chief tax officer at Jackson Hewitt, recommends considering the following:
Size of the lottery winning: That can serve as a guide to determining taxes you may owe and the financial security you can derive from it. If the amount is on the smaller side, a lump sum may simply be easier.
Current and projected earnings: Consider your ability to earn money and tax rates over your lifetime. Would the earnings potential of a lump sum top the money you’d earn over the duration of an annual payment?
Slim odds: 7 things more likely to happen than winning the Powerball or Mega Millions lottery
History lesson: Top 10 lottery jackpots for Powerball, Mega Millions: Who won and where winning tickets were sold
How much do you bring home?
That depends on how you decide to take your money and complex state laws.
If you win the Powerball jackpot, you’ll likely be propelled into the highest federal tax bracket. Your state of residency and where you bought the winning ticket can greatly impact what you pay in state taxes.
For example, if you’re a California resident and purchase your ticket there, then you pay the 37% federal tax rate but are in luck because California doesn’t tax lottery winnings, Steber said.
New York, though, has the highest tax rate on lottery winnings.
But, if you’re a California resident and you’re on vacation in Rhode Island and decide to buy a ticket there, you’ll owe the federal tax and possibly, some California tax, he said.
But, if you’re a California resident on vacation in Rhode Island and decide to buy a ticket there, you’ll have to include your lottery winnings on your federal and California tax returns and file a nonresident Rhode Island tax return for your jackpot. You should claim a tax credit for the Rhode Island taxes on your California return so you won’t be double-taxed on the same income in two states, he said.
“This is where a tax professional really comes in handy,” Steber said. “State taxes can be very tricky.”
Winners: Jackpot: Two people finally claim $1.34 billion Mega Millions lottery winnings
Related costs: Powerball is at $1 billion! But if you win it, higher interest rates will cost you millions
How long does it take to get your money if you win the Powerball jackpot?
Once you claim the prize, it shouldn’t take too long, Azoury said. “Maybe a couple of weeks,” he said.
Remember, most people won’t claim their winnings right away because they’ll take time to set their plan. Earlier this year, it took the unknown Illinois Lottery winner of the $1.34 billion Mega Millions jackpot nearly eight weeks to come forward. The person who wished to remain anonymous took the time to work with lawyers and financial advisers to decide to take the lump sum payment of $780.5 million, Mega Millions said.
Claim periods vary by jurisdiction so people should check with the lottery in the state where the ticket was purchased to get the applicable claim period for that ticket.
Powerball claim periods range from 90 days to one year from the draw date, the lottery said, but vary by jurisdiction. Winning ticket holders should check with the lottery in the state where the ticket was purchased to get the applicable claim period for that ticket.
Medora Lee is a money, markets, and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
