Mega Hundreds of thousands surges to $750 million. Listed below are suggestions if there’s a winner
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The Mega Millions jackpot just won’t end.
With no ticket matching all six numbers drawn on Tuesday night, the grand prize has reached up to $ 750 million. The amount that exceeds the total economic activity of a few small nations marks the fifth largest jackpot in US lottery history.
The Powerball jackpot is now $ 550 million. While the chance that a single ticket will match all six numbers in both games is tiny – 1 in 302 million for Mega Millions and 1 in 292 million for Powerball – it is still worth pondering how to deal with such a godsend would if you beat the odds of winning.
First of all
One of the most important aspects of winning an extreme amount of money is protecting the winning ticket. Experts recommend making a copy and keeping it in a safe place.
Your goal should be to share the news with as few people as possible. You should also try to protect your identity if you can. While the standard recommendation is to sign the back of the ticket, be aware that doing so may affect your ability to remain anonymous if state laws allow you to set up a trust or limited liability company to name chance instead of doing it yourself.
And you should seek expert advice before claiming your award, starting with an attorney who can help you manage your sudden fortune. Your team should also include a CPA and a financial advisor who should be experienced helping clients deal with major issues.
“You want to be thoughtful [experts] Walk you through the emotional side of winning, but also through the commitment that comes with that type of wealth, “said CPA Mark Alaimo, a member of the American Institute of CPAs’ Personal Financial Specialist Committee.
Reducing your tax burden
For the $ 750 million Mega Millions jackpot, the cash option that most winners choose instead of an annuity is $ 550.6 million.
However, before that gets to you, 24% – or $ 132.2 million – will be withheld for federal taxes. You can also rest assured that you owe much more to Uncle Sam, as the maximum marginal rate of 37% applies to income over $ 523,600 for individual taxpayers and $ 628,300 for married couples filing together. As a rule, state taxes are also due.
The most immediate way to reduce the amount of income tax you pay is to start thinking outside the box, especially during the pandemic. Basically, the government gives you a tax break if you use private money for public purposes.
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You can donate up to 60% of your Adjusted Gross Income in cash to a nonprofit or a donor-recommended fund and receive a tax deduction for the amount in the year you donate. They can also set up a private foundation, donate their income, and then decide how to distribute it over time.
“A private foundation can run programs,” said Alaimo. “You could open and run a soup kitchen owned by the foundation.
“With a fund recommended by donors, you can only donate [an existing] Soup kitchen.”
Big jackpot winners will open doors to an investment world that most Americans will never look directly at.
To gain access to more exclusive investment opportunities, wealthier individuals can be classified as “accredited” by federal regulators. This means they will pass the test of having at least $ 1 million in investable wealth (excluding the value of their home) or an average annual income of $ 200,000 ($ 300,000 for married couples).
Investment opportunities available to winners determine the bandwidth, Alaimo said. For example, they could gain access to private equity funds that invest in companies whose shares are not traded on exchanges. Or they could get the chance to invest in commercial real estate or venture capital funds that invest in things like tech startups.