If you win the lottery jackpot, you will have to make some big decisions. One of them will be whether to take the winnings in a lump sum award, which will give you all the money at once, or an annuity payment plan that will pay you a percentage of your prize over a period of years. The choice will affect your taxes. Generally, lottery agencies withhold 24% of the total prize for federal taxes. The rest of the tax amount depends on how you choose to take your money and complex state laws, Steber said. In New York, for example, winners can choose to receive an annual interest payment or buy bonds that are taxable when they mature.
A lottery jackpot can make you a multimillionaire, but the odds of hitting it are astronomical. You’re more likely to be hit by lightning than to win the Powerball or Mega Millions jackpot, according to figures from the National Weather Service.
But why do people spend so much money on lottery tickets? Mostly because they have the naive belief that someone, someday, will hit it big. But they also know that the odds are bad, and they are contributing billions to government receipts that could be spent on other things — like retirement or college tuition. For those who insist on purchasing tickets, there are strategies to improve your odds. But it’s still worth remembering that your chances of winning a jackpot don’t increase by playing more frequently or buying more tickets for each drawing.