Through the gate – CNBC
Powerball has soared to $760 million, the sixth-largest prize in the game's history, and experts are offering advice on what the lucky winner should do.
If you match the winning ticket, you can choose between two options: annual payments worth $760 million or a one-time payment worth $383.6 million. Both estimates do not take tax deductions into account.
The next Powerball drawing is Saturday at 10:59 p.m. ET, and the odds of winning the prize are approximately 1 in 292 million.
Whether you choose a lump sum or an annual payment, you'll face a big tax bill, including an initial 24% federal withholding tax.
[¿Quién ganó 1,765 millones del Powerball en California? “El teléfono suena sin control, gente diciendo felicidades. Es muy loco”]
But that will soon reach 37% of the federal income tax, and the final bill will be millions more. (You may also have to pay state taxes on lottery winnings.)
Find a team of financial experts
Lottery winners typically “don't have the knowledge base to handle this large sum of money,” said Andrew Stoltman, a Chicago-based attorney who has represented many lottery winners. “It's very similar to what we see with our clients who are professional athletes.”
That's why finding the right team of professionals, including a financial advisor, accountant and lawyer, is critical, he said.
According to Warren Ragusin, an estate planning attorney and partner at Lowenstein Chandler, the winner should prepare for the “estate tax consequences” of a multimillion-dollar win.
In 2024, federal estate tax deductions are $13.61 million for an individual or $27.22 million for a married couple. But without changes from Congress, those limits will be cut in half in 2026.
[Aparece la persona ganadora de los $1,600 millones del Mega Millions a reclamar su premio en Florida]
“There are many different estate planning ideas and techniques you can use to save on estate taxes and benefit your family,” Ragusin said.
Saturday's Powerball drawing comes two and a half months after a ticket sold in California won a $1.765 million prize. Meanwhile, the Mega Millions jackpot is back down to $92 million and the odds of winning that prize are approximately 1 in 302 million.
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