What to Do If You Win a Lottery Jackpot

A lottery jackpot is a large prize that can be won by matching all or most numbers in a lottery drawing. Some countries offer jackpot prizes that are paid out over time in annual payments, while others provide a one-time lump sum payout. The choice between an annuity and a cash payout is not a one-size-fits-all decision, and winners should consult a tax attorney, financial planner and/or certified public accountant before choosing a winner option.

It seems like lottery jackpots are popping up more often lately, and that’s because they are. Since 2021, five jackpots have topped $1 billion, including the latest Mega Millions prize. That’s partly due to higher interest rates, but also because the odds of winning have worsened over time.

NerdWallet contributor Kemberley Washington says if you win a huge lottery prize, the first thing you should do is put together a team of professionals that includes a financial advisor, an estate planning attorney and a tax lawyer. They can help you understand the tax consequences of your options and ensure you’re taking advantage of any deductions or credits available to you.

Most lottery winners take the lump sum option, and that’s because they believe that they can invest their winnings and come closer to the advertised jackpot than the annuity payment schedule would. But the choice is not a one-size-fits-all one, and it depends on whether you need immediate financial relief or want to quit your job and move on to something more fulfilling.