Top Stories
Top Stories
Personal Finance

Mega Millions jackpot climbs to $348 million. If you beat the odds and win, here's what to consider before claiming

Key Points
  • Your chance of winning the Mega Millions jackpot is roughly 1 in 302.6 million.
  • For Powerball, it's 1 in 292 million.
  • If you beat those astronomical odds against winning, there are aspects of coming into sudden wealth that you should consider before heading to lottery headquarters to claim your prize.

For all the Mega Millions players whose dreams of a Christmas Day windfall didn't come true, the good news is that you get a chance to win an even bigger jackpot in the next drawing.

The bad news? You likely won't win.

"The sheer number of possible ticket combinations makes it improbable," said Kenneth Ryan, a statistics professor at West Virginia University.

Photo by Kevork Djansezian / Getty Images staff

The jackpot for Mega Millions has climbed to $348 million after no ticket had all six winning numbers in Tuesday night's drawing. Your chance of winning that top prize is roughly 1 in 302.6 million.

For comparison, this would be the same as getting one chance to flip a coin 28 times in row and have it land on the same side each time, Ryan said.

Even if you buy more than one ticket or join an office pool, "you're starting at such a low chance of winning that you don't really push the needle all that much," Ryan said.

In fact, to give yourself a 50-50 chance of winning — i.e., the same odds when you flip a coin once — you'd have to buy up more than 151 million tickets with different number combinations. Even then, though, you wouldn't be able to guarantee that you're the only winner.

largest lottery jackpots updated obrien

Rank Amount Date won Game Winner locations
1$1.586 billion"Jan. 13 2016"PowerballCA-FL-TN
2$1.54 billion"Oct. 23 2018"Mega Millions SC
3$758.7 million "Aug. 23 2017 "Powerball MA
4$687.8 million"Oct. 27 2018"PowerballIA-NY
5$656 million "Mar. 30 2012 "Mega Millions KS-IL-MD
6$648 million "Dec. 17 2013 "Mega Millions CA-GA
7$590.5 million 18-May-13Powerball FL
8$587.5 million "Nov. 28 2012 "Powerball AZ-MO
9$564.1 million "Feb. 11 2015 "Powerball NC-PR-TX
10$559.7 million "Jan. 6 2018 "Powerball NH

Meanwhile, a ticket purchased in New York won Powerball's $298.3 million jackpot in Wednesday night's drawing. The owner of that valuable slip of paper was facing a 1 in 292 million chance of winning. The chance of winning both lotteries is at least 1 in 88 quadrillion (that's 88 followed by 15 zeros).

If you happen to beat the odds and pick all winning numbers in the next Mega Millions drawing, being held Friday night, here are some things to think about before claiming your windfall.

Your privacy

Whether you can shield your identity from the public depends on where you bought the ticket.

While some states allow winners to easily remain anonymous, others do not. And in some states, as long as you plan ahead, you can create a trust or other legal entity to receive your winnings, which avoids your name being attached to the money.

State laws against anonymity are intended to help maintain the transparency of lottery wins. For the winner, however, coming forward can be stressful.

This is what you do if you win the lottery

"Not only do they have to deal with the stress of a media event, and answering questions from a room full of cameras and reporters, but they're also concerned about their safety and the safety of their family," said Jason Kurland, a lottery attorney and a partner at Rivkin Radler, a law firm in Uniondale, New York.

This makes it important to understand the laws of your state (or where you bought the ticket) before doing much of anything.

The tax bite

Jackpot winners don't get all of the money, thanks to federal taxes and, often, state taxes. In fact, Uncle Sam takes a piece before the prize even reaches you.

Whether you take your haul as a lump sum or as an annuity spread out over three decades, your win is reduced by a 24 percent federal withholding.

Mega Millions' upfront cash payment — the option most winners go with — is $210.2 million. The federal withholding would reduce that by nearly $50.5 million, reducing your take to about $159.7 million. However, because income above $500,000 is subject to a top federal tax rate of 37 percent, you could expect to owe more at tax time.

More from Personal Finance:
To navigate holiday returns, watch the clock
States push forward with expanding retirement savings as congressional bills die
Should you really do nothing amid all this market volatility? It depends on your age

On top of that, you'll face state withholding unless you live where lottery wins are untaxed. For states that do take a piece, the rate ranges from a high of 8.82 percent in New York to a low of 2.9 percent in North Dakota, according to lottery site

In other words, you could end up paying more than 45 percent altogether in taxes, depending on where you purchased the ticket and where you live.

"I see the withholding as a good thing," said Cari Weston, a CPA and director of tax practice and ethics for the American Institute of CPAs. "When people come into a lot of money all at once, the last thing they're thinking about is their taxes."

There are strategies you can employ that reduce your taxable income, and therefore the amount you pay in taxes. For example, you can make a cash donation of up to 60 percent of your adjusted gross income and carry forward, up to five years, any excess amount.

Some lottery winners set up their own charitable foundation and donate a portion of their winnings to it.

The importance of turning to pros

Of course, there's more to protecting your windfall than just reducing your tax bill. This is why you should assemble a team of experts with experience in helping people navigate lottery wins. That should include an attorney, a financial advisor and tax advisor.

"Make sure you're comfortable around each team member, and make sure they have the proper accreditation for their field," said certified financial planner Jim Shagawat, president of Windfall Wealth Advisors in Paramus, New Jersey.

You'll also need to appoint someone on your team to serve as your gatekeeper. That person can field requests from moochers or scammers, or even friends and family members, who are after a piece of your windfall.

Subscribe to CNBC on YouTube.

Lottery taxes 2018 version GRANT