- July 17 is National Lottery Day and you might want to try your luck.
- Studies show that about half of all adults in the US spend more than $1,000 every month on lottery tickets.
- But do you know what are the hidden charges when and if you win the lottery? We got you covered.
We’re all thinking it, but only a few say it out loud. Yes, each one of us would love to win a lottery, more than we care to admit it. Imagine the possibilities! An all-expense-paid vacation, a house, thousands of dollars every month for the rest of your life, what not! Who wouldn’t want to win any of these?
It’s National Lottery Day and we all know stories of people winning millions of dollars with their winning lottery tickets, setting them up for a life of luxury. Yes, the odds of winning something are extremely low. This is also the main reason why most people think buying into a lottery is a waste of money. But as they say, fortune favors the bold.
As much as it seems highly unlikely that you will win the lottery, the only way you will have a chance of winning is if you’re in it. It doesn’t matter how many times you play. The odds of you winning remain the same. However, there still is the slightest chance that you just might win. One way you can increase your chances is by buying more tickets for the same lottery. The more tickets you have, the higher your chances are of winning.
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Try your luck on National Lottery Day
July 17 is National Lottery Day and you might want to try your luck. Studies show that about half of all adults in the US spend more than $1,000 every month on lottery tickets. Call them crazy but imagine if one of them wins the jackpot. However, don’t spend too much on lottery tickets. Factor in all your critical expenses before you put money into this.
Moreover, winning the jackpot doesn’t mean you get to keep all the proceeds. Tax on your winnings can bite off a huge chunk.
Costs involved in various winnings
What are the costs you will incur if you win the lottery or any other prize? Check them out below.
If you win a house
Winning a house means you have to pay federal income tax calculated on the value of the property. State income taxes may also apply. This may come up to a significant amount of money, leaving many winners in a fix especially if they can’t cough up the sum all at once. Of course, the upside is that you win a house. And since most of these homes are situated in expensive localities, your yearly property taxes will also be high. The same goes for insurance, maintenance, utility bills, etc.
If you win a vacation
Winning a vacation is wonderful. But you’ll be taxed on the fair value of the trip. Hence, if it’s an expensive vacation, you may end up paying quite a bit in taxes. But, in case the sponsor has managed to get it at a discount, then you won’t have to pay as much.
If you win a car
Getting a swanky new car for free is everybody’s dream. Just that it won’t be entirely free. Just like in winning a house, you will be taxed based on the current value of the car. this will be around one-third of the price. That’s still not that bad since you’ll be paying only 1/3rd to get a brand new car. apart from this, you’ll also have to pay for registration, insurance, and other maintenance charges.
If you win the lottery
The lottery is akin to gambling. So, if you do win anything more than $5,000, 24% of it will be automatically withheld for federal taxes. You will get only the rest. Additionally, if you’re charged state taxes as well, you’ll get only about 50% of your winnings in the end.
What to watch out for
Freebies, prizes, and lotteries are lucrative. That’s precisely why people buy into them. But keep an eye out for scams. Scams offer you money or say you’ve won a prize. But then, they try and extort money from you and then disappear. Here are a few signs that you might be getting scammed:
- The sponsor asks you to pay to enter a sweepstake.
- They ask you to pay “shipping charges”.
- They ask you for your credit card details or banking information.
- You get a call/email saying you’ve won a prize or money in an event you did not enter.
- The fair market value to your prize seems suspiciously inflated and you are asked to pay taxes to a non-government website.
- You are asked to pay handling or processing fees for a prize/lottery you’ve won.
Winning the lottery or a prize is no joke. It can change your life forever. But be careful too. Don’t spend too much on tickets and watch out for scams.