Taryn Phaneuf, Nerd Wallet
The Mega Millions jackpot has ballooned to an estimated $1.02 billion ahead of the next drawing on Friday, July 29. A billion dollars is not an easy number to understand, and it has happened only twice before in Mega Millions history.
If you want a shot at the jackpot, here’s what you need to know.
How to buy a Mega Millions lottery ticket
Mega Millions can be played in 45 US states, as well as Washington, DC and the US Virgin Islands. Players can buy as many $2 tickets as they like. Each ticket requires you to choose five numbers between 1 and 70, and a sixth number between 1 and 25 (or you can let the lottery people generate the numbers for you). The jackpot prize goes to the person (or people) who picks all six numbers correctly.
Your odds of doing so are about 1 in 303 million.
People are also reading…
Although it is a national game, each participating state has its own rules on how to claim a reward. In fact, the time you have to file your claim can range from 90 days to a year from the date the numbers were drawn. Be sure to check the rules in the state where you purchased the ticket.
How much could you earn?
Each Mega Millions jackpot winner has the option to take cash now in a single lump sum payment or receive a portion of the winnings annually for 30 years.
For the $1.02 billion jackpot, the cash option is $602.5 million.
If you chose the annuity option, you could get approximately $15.3 million for the first payment. Then each after that increases by 5%. If you die before all annual payments are made, the rest will be sent to your heirs.
Each option has its pros and cons, Lisa Kirchenbauer, founder and president of Omega Wealth Management in Arlington, Virginia, and a certified financial planner, said in an email.
Kirchenbauer also said that anyone who finds suddenly rich You should put together a team of professionals, including a lawyer, an accountant, and a financial planner.
“Your team will help you decide what is the best option for you,” he said. “It’s not a one-size-fits-all decision.”
How lottery winnings are taxed
If you win a billion dollars in the lottery, you definitely owe federal income taxes. For starters, according to the IRS website, 24% of your earnings are withheld. How much that is depends on whether you opted for the cash or annuity option, since you only pay taxes on what you receive in any given year.
If you take all the cash at once (remember, that’s about $602.5 million), you’ll see $144.6 million taken off the top, leaving you with $457.9 million.
Come April, you’ll likely owe additional federal income taxes, as well as state income taxes, depending on where you live.
What to do if you win
While it’s something we’ve probably all dreamed of, no one is ready to hit the jackpot. If you do, protect your ticket. Anyone in possession of a winning lottery ticket can submit a claim for the prize.
Next, consider your anonymity. Each state has its own laws about whether lottery winners must be publicly identified. Keeping your name out of the news and telling as few people as possible protects you from scammers and long-lost “friends” who want to get back in touch.
The key is to slow down, Kirchenbauer said. “Don’t start spending money before you have time to plan and think.”
Is a $2 Mega Millions ticket worth $790 million? It depends
Introduction
Is $790 million worth $2?
That’s a good question, given that it costs $2 to buy a Mega Millions lottery ticket that could pay out with an estimated prize of $790 million, the fourth-largest jackpot in the nation, after the game’s next drawing on Tuesday night.
ap file
Isn’t that an obvious question?
Not really.
For starters, your chance of winning the grand prize is minuscule, one in 302.5 million. You have better odds for a smaller payout, such as winning $1 million for matching five regular numbers but losing the Mega Ball. But even that is one in 12.6 million. To put that into perspective, your chance of dying in a car accident — something to consider while driving to the convenience store for a lottery ticket — is about one in 101 over your lifetime, according to the National Safety Council. profit.
As lottery officials point out, players should think of their $2 bet as an opportunity to dream while accepting the reality that they probably won’t be entering a new income tax bracket Tuesday night.
ap file
Still, a $790 million opportunity seems worth $2
Ah, but even if you beat the odds, you won’t get $790 million.
First, that’s the amount for winners who take the annuity option, paid in 30 annual payments. But winners almost always opt for cash, which for this draw would pay an estimated $464.4 million.
And then there are federal taxes, which will reduce 37% of that cash prize, leaving less than $300 million, although state taxes could reduce that amount as well, depending on where the winner lives. Still a fortune, but a smaller fortune. That also doesn’t take into account the chance of someone else matching the winning numbers, meaning they’d have to split even those smaller wins in half or more, depending on the number of lucky players.
ap file
Almost $300 million is not chump change
It’s definitely a big paycheck.
To put that into perspective, consider that the median household income in the US in 2020 was $67,500, which means a lifetime of working at that rate would be less than 1% of even the smallest jackpot after taxes.
But sadly, had he won that same award a year ago, before the nation endured a year with an inflation rate of around 9%, his purchasing power would have been significantly higher.
ap file
but someone will win
Eventually, though, the reason the jackpot has gotten so big is because no one has matched all six numbers since April. That’s 28 consecutive draws without someone hitting the jackpot.
With so many people playing now that the potential jackpot is so big, it’s becoming more and more likely that someone or multiple players will finally end that streak. Still, previous jackpots have grown, with the biggest payday ever being a $1.586 billion Powerball jackpot won in 2016.
Mega Millions is played in 45 states, as well as Washington, DC, and the US Virgin Islands. The game is overseen by state lottery officials.
ap file
So is it worth betting $2?
If you’re having fun dreaming of a big windfall that probably won’t make it to your destination, buy a ticket. But if you need to watch your money, consider keeping the $2 in your wallet.
ap file
What are the top 10 US lottery jackpots ever won?
DES MOINES, Iowa (AP) — The Mega Millions jackpot has rose to $1.1 billion, making it the fourth largest lottery jackpot in the country. Here’s a look at the 10 biggest US jackpots ever won and the states where the winning tickets were sold:
1. $1.586 billion, Powerball, January 13, 2016 (three tickets, from California, Florida, Tennessee)
2. $1.537 billion, Mega Millions, Oct 23, 2018 (one ticket, from South Carolina)
3. $1.05 billion, Mega Millions, Jan 22, 2021 (one ticket, from Michigan)
4. $768.4 million, Powerball, March 27, 2019 (one ticket, from Wisconsin)
5. $758.7 million, Powerball, August 23, 2017 (one ticket, from Massachusetts)
6. $731.1 million, Powerball, January 20, 2021 (one ticket, from Maryland)
7. $699.8 million, Powerball, October 4, 2021 (one ticket, from California)
8. $687.8 million, Powerball, October 27, 2018 (two tickets, from Iowa and New York)
9. $656 million, Mega Millions, March 30, 2012 (three tickets, from Kansas, Illinois and Maryland)
10. $648 million, Mega Millions, December 17, 2013 (two tickets, from California and Georgia)
The article Mega Millions: How a Billion Dollar Jackpot Really Works originally appeared on NerdWallet.