A LOTTO player won $1 million on the game of chance – but saw thousands of his prize vanish before he walked away with the cash.
Corbblin Dixon struck gold after buying a $50 scratch-off game at a Publix supermarket in Orlando, Florida.
A lotto player scooped a $1 million prize after buying a $50 game[/caption]
The player defied the odds of one in around 274,000 to land the second-place prize to scoop the windfall.
But, Dixon had a choice on how he wanted to receive his prize.
He opted to take the lump sum route, which meant he walked away with $640,000, per The Florida Lottery.
This meant that $360,000 vanished straightaway, thanks to his decision.
The odds of winning a prize are around one in 4.23, and the Publix store even pocketed $2,000.
Dixon must pay a rate of 24% to federal tax chiefs because the amount is over $5,000.
Winners have to report their windfall, which means they could be pushed into a higher income tax bracket, but this depends on the sum.
If they win such a large amount, they could pay up to 37% tax.
But Dixon was fortunate as the state of Florida doesn’t charge a tax on lottery winnings.
It is one of the few states where gamblers don’t have to pay a tax on their fortune.
The rules are the same for players in California and Texas.
New Hampshire, South Dakota, and Tennessee are also among the states that don’t have taxes for lottery prizes.
However, some states have pretty hefty state taxation rates regarding the lottery.
In New York, for example, gamblers have to pay a rate of 10.9% on top of the tax owed to the federal government.
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.
Gamblers in Maryland, New Jersey, and Oregon must pay a rate of 8% or more.
The amount of taxation a winner has to pay on their prize is among the factors they consider before deciding whether to take the lump sum or annuity.
The annuity is a less popular option but means players receive staggered annual payments over decades.
Mega Millions winners, for example, will receive one payment, then 29 annual checks.
Each payment is 5% bigger than the previous one.
JACKPOT RISKS
Financial expert Robert Pagliarini told The U.S. Sun that taking the lump sum option brings its own risks.
If you take the lump sum, you have to realize that if you start making mistakes, or bad investments, there’s no do-over,” he said.
“It’s not like you are going to win the lottery again. You have one shot at this.”
He explained that taking the annuity gives winners more room or flexibility to make potentially bad decisions in the immediate years after their success.
Lotto lawyer Andrew Stoltmann told The U.S. Sun that around 90% of winners make the mistake of taking the lump sum option.
Top lottery winners in the US
Millions dream of winning the lottery and finding fame and fortune. These are the biggest winners in US lottery history.
- Edwin Castro – $2.04 billion, Powerball, Nov. 8, 2022, in California.
- Theodorus Struyck – $1.765 billion, Powerball, Oct. 11, 2023, in California.
- Unknown winner – $1.602 billion, Mega Millions, Aug. 8, 2023, in Florida.
- Marvin and Mae Acosta from Los Angeles, California, John and Lisa Robinson from Munford, Tennessee, and Maureen Smith and David Kaltschmidt from Melbourne Beach, Florida – $1.586 billion, Powerball, Jan. 13, 2016.
- Unknown winner – $1.537 billion, Mega Millions, Oct. 23, 2018, from South Carolina.
- Unknown winner – he sued the mother of his child to keep his identity hidden – $1.348 billion, Mega Millions, Jan. 13, 2023, from Maine.
- Unknown winner – $1.337 billion, Mega Millions, July 29, 2022, from Illinois.
- Cheng and Duanpen Saephan, and Laiza Liem Chao – $1.326 billion, Powerball, April 7, 2024, from Oregon.
- Yanira Alvarez – $1.08 billion Powerball, July 19, 2023 in California.
- Wolverine FLL Lottery Club – $1.05 billion, Mega Millions, Jan. 22, 2021, from Michigan.
- Unknown winner – $842.4 million Powerball, Jan. 1, 2024, from Michigan.
