When a jackpot grows to the millions of dollars, it makes for big headlines. But the reality is that there are many things to consider before winning a lottery jackpot.
Lottery winners have several options when it comes to receiving their prize: They can opt for an annuity, which is paid in payments over 30 years, or a lump sum payout. A lump sum gives the winner more control over the money right away, and they can invest it for a higher return than with an annuity.
But while some people claim to have a system for picking the winning numbers, there is no mathematical way to guarantee winning the lottery. In fact, you are almost 300 times more likely to be struck by lightning than win the Powerball or Mega Millions jackpot.
If you do decide to play, make sure to buy multiple tickets. You’ll also increase your odds of winning by choosing numbers that aren’t close together. And avoid playing numbers that have a sentimental value, such as your birthday or your children’s ages. That can increase the number of other players who choose those same numbers, which reduces your odds of hitting the jackpot.
But if you do hit the jackpot, you’ll need to be prepared for the tax consequences of winning the lottery. The IRS requires lottery agencies to withhold 24% of the amount of any winnings over $5,000. But this may not be the full amount you end up owing, depending on your tax bracket and other income sources.