1 day Ago By Jacob Willeford
A LOTTERY player has been forced to hand over about half of their prize after a crucial decision.The win came from a popular scratch-off game and quickly totaled a life-changing amount of money.GettyA lottery player has won $1 million from a popular scratch-off game (stock image)[/caption]Florida Lottery officials confirmed earlier this month that Rebecca Clarke, a 37-year-old resident of Santa Rosa Beach, located west of Tallahassee, was the lucky ticket holder.
She played the $5 Bonus Letter Crossword game, purchasing the ticket from a nearby Cumberland Farms convenience store.After scratching off corresponding words, she revealed a $1 million prize.The word-themed scratch-off game offers $76.
6 million in prizes, with only 10 worth $1 million.Clarke grabbed one of the 10 and recently went to Florida Lottery headquarters in Tallahassee to claim the winnings.CLAIMING PROCESSShe followed the claiming process perfectly, filling out the claim form and scheduling an in-person appointment, given the prize amount being over $250,000.
While there, Clarke was confronted with the decision of getting all the money upfront through a one-time lump sum distribution or having it split over several years through annuity payments.Like most winners, Clarke chose the lump sum.The federal government notably taxes all lottery winnings above $5,000 at a rate of 24%.
State governments also take out cash per state income taxes, but Florida does not have one. That means instead of walking away with $1 million, the lucky winner really walked away with about $640,000.About $360,000 was immediately stripped away.
BEST DECISION?Controversy over whether the lump sum or annuity payments are better has gone on for years.Some lawyers who have represented lottery winners have told The U.S.
Sun that, in their experience, annuity payments are better.Lottery winnings: lump sum or annuity?Players who win big on lottery tickets typically have a choice to make: lump sum or annuity?The two payout methods can impact how much money you get from your prize.Annuities pay out slowly in increments, often over 30 years.
Lump sums pay all at once but in a smaller amount, as taxes are withheld in one go. That means 24% of your prize goes to Uncle Sam right away. Many states tax winnings as well.
Annuities can provide winners time to set up the financial infrastructure required to take in a life-changing amount of money, but lump sums have the benefit of being taxed only once.Inflation is also worth considering when making a choice, as payouts do not adjust with the value of a dollar. That means that you’ll likely be getting less valuable money towards the end of an annuity.
Each state and game pays out prizes differently, so it’s best to check with your state’s lottery to confirm payment policies. A financial advisor can also help you weigh the pros and cons of each option.Experts have varying opinions on whether to take the lump sum or take the annuity.
It provides a financial buffer should winners accidentally spend all the cash one year, as they still have more coming in for about the next decade.This was further emphasized by Akshay Khanna, CEO of Jackpot.com.
Khanna explained to The U.S. Sun the annuity payments “guarantee wealth.
”However, he argued that the lump sum provides more opportunity to grow the wealth that winners come into.He said it “offers higher expected returns over the long term” with the right investment strategy.Either way, all experts agree that winners like Clarke should consult with a financial advisor and lawyer before claiming their prize.
“Winners typically want to have a plan for the money prior to claiming,” Khanna noted.Some staggeringly high lottery wins remain unclaimed in April in some states.For example, a $344 million Mega Millions jackpot win still is without an identified ticket holder after several weeks.
There was also a three-step warning for a $50,000 Powerball win, and the player came extremely close to winning $89 million. Responsible gambling Remember to gamble responsiblyA responsible gambler is someone who:Establishes time and monetary limits before playingOnly gambles with money they can afford to loseNever chase their lossesDoesn’t gamble if they’re upset, angry, or depressedNational Council on Problem Gambling – https://www.ncpgambling.
org/Gamble Aware – www.begambleaware.orgFor help with a gambling problem, call the National Gambling Helpline on 1-800-522-4700 or go to ncpgambling.
org/chat.
