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Lottery payouts vary wildly. The exact amount of the payout depends on how much money is made by selling tickets. In past lottery results the biggest payout to one person was over $750 million dollars. In most cases, past lottery numbers were chosen by more than one person so the payout was shared. Even when one person gets the full jackpot, the actual amount paid is only a percentage of the ticket sales. Different states award different percentages so payouts vary depending on state lotteries. Big lotto payouts happen when more tickets are sold.
The exact amount of the final payout depends on a couple of factors. One thing affecting your payout is tax. Lotto payouts are subject to income tax and state tax. The taxes may be different depending on what state you are in and whether or not the payout is in a lump sum or is made in annuity payments.
Another thing that affects a payout is the number of winners. Payouts are shared between winners so the more winners, the lower the individual payout amount.
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There are two main ways to get a lottery payout.
- As an annuity over 20 years. The lottery will pay you a set amount every year for twenty years. The advertised lottery payout is the total amount you receive with an annuity.
- As a lump sum. The money is paid to you in one large payment. The actual amount of money you will receive will be a percentage of the advertised lottery payout.
Both of these types of payout have advantages and disadvantages. The annuity option results in a larger payout but the lump sum payment can be better for some people.
Getting your money in a lump sum is the most exciting way to receive it. Visions of swimming in money have surely gone through the mind of anyone dreaming of a big lottery win. The lump sum lottery payment works just like it sounds. They give you the money all at once. Of course, that means that you have to pay taxes on it all at once and since it is usually a fairly large number, you will probably have a very hefty tax bill. The lottery does a tax withholding and you receive between 40 to 60 percent of the full amount.
For people who have a specific need for a big sum of money like starting a business or paying off a loan may prefer a lump sum payment. Also, if interest rates or other investment options are good, the lump sum payment can end up giving you more money in the end. For other lottery winners who may want to continue with their present jobs and lifestyle and just use the money for extra luxuries or a safety net, the annuity is a better option as it is more likely to lead to a bigger payout over time.