The first question that has to be answered by a winner is how they will accept the winnings. There are two options for claiming the prize: taking the cash value or the annuity.
The cash value provides a one-time payment, and taxes slash the sum from the estimated $648.2 million cash value for Friday’s drawing. The annuity option provides winners with 30 payments over 30 years, with each payment being 5% larger than the previous. The annuity option “helps protect winners’ lifestyle and purchasing power in periods of inflation,” according to the Mega Millions website.
There also may be scammers who try to take money away from winners. Mega Millions representatives will never call, text, or email anyone about winning the prize, a preferred tactic for some scammers, according to the lottery’s website. To claim the prize from the Mega Millions, the winner must identify him or herself.
If the winner opts for the cash value of the lottery prize, he or she will also be subject to substantial taxation. The cash value prize is subject to a mandatory 24% federal tax withholding, along with other state taxes that may apply.
The annuity option is still subject to taxes, but since the payments are smaller, the taxes placed on the payments are smaller than those on the full jackpot.
Tickets for the Mega Millions are sold in 45 states, along with Washington, D.C., and the U.S. Virgin Islands. Drawings for the Mega Millions are held at 11 p.m. on Tuesdays and Fridays.
Friday’s pot marks the second largest in history, only trailing the $1.537 billion prize on Oct. 23, 2018.