You’ve won the Mega Millions jackpot. Now what?
Have your lucky numbers ready for the Mega Millions jackpot? Buzz60’s Mercer Morrison has the story.
A view of a sign showing the jackpot for the Mega Millions lottery at $900 million in New York, New York, on October 17, 2018. (Photo: Justin Lane, EPA)
DES MOINES, Iowa – Despite the terrible odds – one in 302.5 million for those keeping score at home – someone will eventually match all six numbers and win the Mega Millions jackpot, now at $900 million. It could happen as soon as Friday night, when the next drawing is held, leaving most of us disappointed but some lucky winner beset by a host of questions.
Here are some answers for someone holding that prized lottery ticket.
I’VE WON. NOW WHAT?
Lottery officials recommend winners take a deep breath, put their winning ticket in a safe spot and consult with a reputable financial planner before popping over to the lottery headquarters. Their first decision is whether to take the cash option, which would now be $513 million, or an annuity, with one initial payment and annual installments over 29 years. Nearly all winners opt for cash, but the annuity has advantages, as it reduces the tax bill a little and offers a stable flow of income that climbs by 5 percent annually.
HOW LONG DO I HAVE TO CLAIM THE JACKPOT?
States have different rules, so depending on where you purchased the ticket, you have from 180 days to a year.
DO I GET MY MONEY INSTANTLY?
No, you can’t just cash one of those oversized checks shown in all the winner photos. Payment speed also varies by state, but a week or two is common. Carole Gentry, a spokeswoman for the Maryland lottery, said the requirement is seven to 10 days in that state.
CAN I KEEP MY NAME SECRET?
Winners can remain anonymous in six states – Delaware, Kansas, Maryland, North Dakota, Ohio and South Carolina. In Arizona, people who win more than $600 can keep their names secret for 90 days after claiming prizes, but after that names are public record. In Michigan, winners are anonymous unless they win Mega Millions or Powerball prizes.
WHAT ABOUT TAXES?
For winners of $5,000 or more, all states automatically deduct 24 percent in federal taxes but state taxes vary widely. Some big states, including California, don’t withhold taxes from lottery winnings, and some like Texas don’t have individual income taxes at all. For the others, the state takes a bite, especially in New York, where a winner would need to pay a state tax of 8.8 percent. Residents of New York City would pay an additional tax of 3.9 percent. In general, taxes eat up nearly half of winnings.
Melissa Labant, a tax policy expert at the American Institute of Certified Public Accountants, said winners should realize that while taxes are initially withheld when prizes are awarded, more money will likely be due at tax time as people suddenly are in up to a 37 percent tax bracket.
“That catches people off guard,” she said. “You have to be prepared to write another check to the IRS in April.”
WHAT ARE MY TAXES IF I DON’T LIVE IN THE STATE WHERE I BOUGHT THE TICKET?
This can get complicated, but for the most part winners pay taxes where they bought the ticket and then can get a credit on their taxes in their home state. The final tax bill can depend on if the state where you live taxes at a higher or lower rate than where you purchased the ticket. Rules vary by state, so this is a good topic for that financial planner.
It could happen as soon as Friday night, when the next drawing is held, leaving most of us disappointed but some lucky winner beset by a host of questions.
Est. Cash Value: $550.6 Million
Frequently Asked Questions
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The easiest way is right here on our website. The results of the most recent drawings appear on the home page. You can also get results from previous drawings. Results can also be obtained from any Texas Lottery retailer.
Check your ticket(s) upon receipt to ensure they are correct and are the ticket(s) you intended to purchase. Sign Your Ticket upon receipt.
State laws and regulations do not permit the sale of tickets by mail, phone, or Internet. Also, federal laws and regulations may restrict such sales. You must buy your tickets from a licensed retailer here in Texas.
The State Lottery Act prohibits purchase of tickets by credit or with Food Stamps. Retailers, at their own discretion, may accept a check for tickets. Retailers can accept a debit card for payment.
Draw Game (Lotto Texas, Mega Millions, Powerball, Cash Five, Pick 3, Daily 4, Texas Two Step and All or Nothing) winning tickets are valid for 180 days from the date of the drawing. Scratch tickets are valid for 180 days from the close date of the game set by the Texas Lottery.
For U.S. citizens, the Federal Government requires the Texas Lottery Commission to report the following lottery winnings to the IRS:
$600 or more in winnings when the payout is at least 300 times the amount of the per board wager,
The tax withholding rate is 24% for lottery winnings, less the wager, for prizes greater than $5,000.
An example of the calculation used to determine whether a prize winning exceeds the threshold for required withholding is detailed below:
Prize withholdings are calculated on the total amount of gross proceeds (the amount of winnings minus the amount wagered).
For example, if you purchase a $50.00 ticket that has a prize of $5,007.00, taxes would not be automatically withheld because the gross proceeds are less than $5,000, ($5,007.00 – $50.00 = $4,957.00).
However, for a $50.00 ticket with a prize of $5,100.00, taxes will be automatically withheld because the gross proceeds exceed $5,000, ($5,100.00 – $50.00 = $5,050.00).
Because the amount of taxes owed by an individual is different for each individual winner, the winner should consult a legal or financial tax expert to determine his or her tax liability.
Any individual who is not a citizen or resident of the United States is a nonresident alien individual. The tax withholding rate for a nonresident alien is 30 percent on prizes of $600 or more.
However; the IRS considers an alien individual meeting either the Green Card test or the Substantial Presence test for the calendar year, to be a resident alien for tax purposes. If considered to be a resident alien by the IRS for tax purposes, the Texas Lottery Commission will use the same reporting and withholding requirements as a U.S. citizen. For further information, see IRS Publication 519, U.S. Tax Guide for Aliens
You may find the estimated cash value of the current estimated annuitized jackpot on the home page of our website.
Currently, the choice must be made at the time the ticket is purchased, and cannot be changed. This is a Texas Lottery policy established in response to IRS rulings that impact the way the jackpot is taxed.
All retailers are authorized, but not required, to pay prizes of $599 or less. Retailers are not required to keep cash on hand to pay all tickets. They have the option of paying by check or money order. If they choose to pay by money order, they may not charge the player any fee for the money order.
You may also take the ticket directly to the Texas Lottery Claim Center nearest you, Claim Center locations.
If you were unable to redeem your ticket, we invite you to call our Customer Service Hotline at 800-375-6886 and speak with a Communications Specialist. They can assist you with information on how to proceed.
You may also submit your ticket to the Texas Lottery Commission, Attn: Claim Center, PO Box 16600, Austin, Texas 78761-6600. Please include a detailed letter with as much information as possible (date, time, location of ticket purchase, any other retailer locations where you tried to redeem the ticket, etc.). We will research the ticket and contact you with our findings. The Texas Lottery Commission is not responsible for tickets lost or damaged in the mail.
In connection with each draw, 40.47 percent of the proceeds from Lotto Texas ticket sales will be allocated to the 6-of-6 (jackpot) prize. The jackpot amount will be divided evenly among all jackpot winners. If there is no winner, the amount allocated for the jackpot prize will become part of the jackpot prize for the next draw. The jackpot prize will be the greater of the total allocations from Lotto Texas ticket sales or the amount advertised.
In connection with each draw, 2.23 percent of the proceeds from Lotto Texas ticket sales will be allocated to the 5-of-6 (second) prize. The allocation will be divided evenly among all winners at that level. Prizes will be rounded to the nearest dollar. If winning ticket includes EXTRA then the second prize includes an additional $10,000. Any part of the second prize allocation for a drawing that is not paid in prizes will be carried forward and will become part of the second prize for the next drawing. In connection with each draw, 3.28 percent of the proceeds from Lotto Texas ticket sales will be allocated to the 4-of-6 (third) prize. The allocation will be divided evenly among all winners at that level. Prizes will be rounded to the nearest dollar. If winning ticket included EXTRA then the third prize includes an additional $100. Any part of the third prize allocation for a drawing that is not paid in prizes will be carried forward and will become part of the third prize for the next drawing. The 3-of-6 (fourth) prize is $3, and 4.02 percent of Lotto Texas ticket sales is allocated for the fourth prize. If winning ticket included EXTRA then the fourth prize includes an additional $10. If winning ticket included EXTRA then the 2-of-6 prize is $2.
The Lotto Texas prize chart is listed below:
Yes, players may play as a group though only one individual or legal entity may claim a prize (see #17, below). Players who join together to purchase lottery tickets are encouraged to consider putting the groupвЂ™s agreement in writing before purchasing a ticket. Below is a list of suggestions players may want to consider before forming a lottery pool. Following these suggestions would not constitute the formation of a legal entity for the purposes of claiming a prize. There are other ways to set out and define a groupвЂ™s relationship and it is recommended that a group that purchases a ticket seek professional advice, including but not limited to legal and financial advice, before claiming a prize. These suggestions may not be appropriate for all circumstances and are not intended to replace the services of other professional advice that the group might seek. An agreement between a group of players might include the following: вЂў a statement that the group is joining together to purchase and own lottery tickets and share any resulting prizes; вЂў the names of all of the participants, including the amount each contributed and the total amount spent to purchase the tickets; вЂў a statement that a player is not considered a participant or a member of the group if they have not contributed money or signed the agreement; вЂў the name of the individual who is authorized and may act on behalf of the group and, if you wish, list any specific responsibilities and duties this individual may have if the group were to claim a prize; вЂў a statement on how prizes would be divided among the participants in the group, including a non-cash prize if awarded; вЂў a description of the tickets purchased including the drawing date(s) of the tickets, copies of the tickets, and/or list the ticket numbers.
No. The Texas Lottery Commission will pay only one claimant per ticket. A вЂњclaimantвЂќ can be an individual, a trust, a partnership, a corporation, or any other legal entity. The way in which you claim a prize cannot be changed after the ticket is validated and the prize is paid; therefore, careful consideration and professional advice, including but not limited to legal or financial advice, is recommended before the prize is claimed, especially for larger prizes or those prizes that are paid by installments. If you choose to claim the prize as a trust, partnership, or other legal entity, the legal documents that create the legal entity must be submitted for review to the Texas Lottery’s Legal Services Division before claiming your prize. This is required to ensure the documents comply with the State Lottery Act and the CommissionвЂ™s administrative rules. If you claim your prize as any entity other than an individual, a Federal Employer Identification Number (FEIN) is required.
The State Lottery Act allows a person to assign, in whole or in part, their right to receive lottery prize installment payments if the assignment is made to a person designated by an order of a district court of Travis County. There are further requirements regarding voluntary assignments in the State Lottery Act and the CommissionвЂ™s administrative rules, including review by the prizewinnerвЂ™s independent legal counsel.
By marking the appropriate box on your playslip, or by telling the clerk you want to use Quick Pick, the lottery terminal will automatically select numbers for you. The Quick Pick random number generator for our draw games has no built-in memory. Once a set of numbers is picked in one play, the random number process starts fresh for the next play. The fact that a number is picked in one play has no influence on the chances of it getting picked in following plays. Each set of numbers generated by the Quick Pick feature is unrelated to any other Quick Pick selection. This means that one or more numbers, or even the same set of numbers, can be chosen by the Quick Pick option on more than one play. If the random number generator was restricted to producing each set of numbers only once, the system would not be completely random.
It’s important to understand what happens when a Lotto Texas jackpot is won. If the jackpot winner has chosen 30 Annual Payments, Texas Lottery officials provide the Texas Treasury Operations Division of the State Comptroller’s Office with the jackpot amount. The Division submits a request for bids from previously approved investment firms. The contract is awarded to the investment firm that will provide the jackpot amount, paid over 30 years, at the lowest cost to the State. The Texas Lottery uses a portion of the sales for that drawing – plus any money rolled over, if there is any, from previous drawings – to buy the 30-year investment. According to the State Lottery Act, the funds must be invested in such a way as to ensure the payment of the prize. All interest earned on the investment is a part of the prize.
A similar process is followed if the jackpot winner has chosen Cash Value Option. Texas Lottery officials still provide the 30-year jackpot amount to the Treasury Operations Division, which still calls for competitive bids from previously approved investment firms. However, the investment is not actually purchased. Instead, the winner receives one lump-sum payment equal to the amount of money that would have been required to purchase the 30-year investment. This is called the “net present value” of the jackpot. The lump sum payout for a given estimated jackpot varies due to changing interest rates.
If you wish to obtain additional information about the investment process, you may contact an Investment Officer of the Texas Treasury Operations Division of the Comptroller’s Office at (512) 463-4000.
All Texas Lottery drawings are broadcast live by satellite to television stations across the state free of charge. Because we do not have contracts with the various stations, the use of this resource is solely at the media’s discretion. You may wish to contact your local television stations to encourage them to broadcast our drawings on a regular basis.
You may contact the Texas Lottery at 800-375-6886 during normal business hours (M-F 7:00 a.m.-5:30 p.m., Central Time) and select the Licensing option from the recorded menu. A Licensing Representative will be happy to provide you with information on the basic requirements for becoming a Texas Lottery retailer. A Licensing Representative would also be glad to mail you an Application For A Lottery Sales Agent’s License. The application will contain information on how having Texas Lottery tickets available in your retail location may benefit your business.
Certain eligibility requirements must be met.
Certain raffles are permitted under the Charitable Raffle Enabling Act. The Texas Lottery Commission does not enforce this act or regulate charitable raffles. For more information about charitable raffles, see the information on raffles at the Attorney General’s website.
Your Texas Lottery sales license renewal application is mailed to your business address 90 days prior to your license expiration date. If you did not receive your license renewal application or you cannot locate your license renewal application, please contact the Texas Lottery Retailer Services Department at 800-375-6886 to request a replacement copy. Your license renewal application can be sent to you by regular USPS mail, fax or by e-mail. Also, consider registering at our Lottery Service Portal where you can now renew your license(s) online.
Four (4) distinct tones play on lottery terminals to let players know the status of their winning and non-winning tickets. You may listen to samples of each unique tone on the Texas Lottery website. Each time a ticket is scanned for inquiry or validation a distinct tone will identify one of the following results:
1) Prize winning tickets under $600 and free tickets.
2) Prize winning tickets of $600 and higher and non-cash prizes. These prizes can only be paid at a Texas Lottery claim center.
3) Non-winning tickets.
4) Retailer cannot validate (variety of reasons such as inactive pack, expired ticket, previously paid, etc.)
Click here to find out myths about the Texas Lottery.
Can’t find your answer here? Contact us at:
- Texas Lottery questions: 800-37LOTTO (800-375-6886)
- Charitable Bingo questions: 800-BINGO-77 (800-246-4677)
Frequently Asked Questions