Selling Lottery Winnings
"You just won the $100 million jackpot... What are you going to do?" Disney World may be one of the more humorous quotes to come out of this question. However, the reality to the situation is that making your dreams come true may have more to do with how you choose to receive the earnings.
First of all, allow us to congratulate you if you have found your way to this article as a recent lottery winner. The odds of winning a mega jackpot are somewhere around one out of 176 million. Many people dream about what they would do if they could receive a large sum of money. However, few ever really think about how they would prefer to receive it.
The choices may seem simple, as there is really only two ways to go. You could receive a lottery lump sum payout, or you can option to receive the total in monthly payments that will continue over the course of many years. Most people choose to receive the lump sum, but is there a catch?
Any lottery winnings are initially taxed 25 percent right off the top for federal. An addition six to nine percent will go towards your local tax. After this, the remaining payout will depend on how you choose to receive your earning. Receiving monthly earnings may reduce your taxes, and will ensure a steady income for years to come. However, most experts are currently recommending the lump sum as the best way to go.
With interest rates as low as they are (practically zero in some instances), the value of your lump sum earnings can add up to several million more than if you optioned for the payments. This was not always the case. Most experts are saying that this lump sum parade should last through 2015, so if you happened to be a luck winner between now and then, thank your lucky stars, and seriously consider the advantage of cashing in all your chips!