Pam Aird couldn’t believe her eyes when she checked the EuroMillions lottery ticket she purchased for the 25 October draw. She tucked the ticket away inside a book for safekeeping and looked up the results online the next morning. And her big win couldn’t have come at a better time.
Pam has recently been off work due to illness and was on her way back from a doctor’s appointment when she decided to stop and buy a ticket.
Unfortunately the results did nothing to help her get a good night’s sleep. She tossed and turned the whole night thinking about all the ways she could use the money to help her family, friends and her local community. Pam has always loved the theatre and already pledged to use some of her winnings to upgrade the lighting at the Unicorn Theatre in Abingdon.
She will also use some of the money to pay off her debts while she waits to have heart surgery. Pam doesn’t plan to go back to work as a legal secretary but looks forward to volunteering with local charities instead. This is proof that you don’t have to win the jackpot for your life to change. Even a modest £1 000 000 will enable Pam to enjoy a more comfortable retirement.
Of course, it helps that EuroMillions lottery winners don’t have to pay tax on their winnings. Even if you play the lottery from outside Europe, it’s unlikely that taxes will be deducted from your prize. Of all the countries that offer the EuroMillions, only Spain, Portugal and Switzerland levy tax on winnings. However, you may have to pay tax according to the laws of your home country. It’s best to check with your local tax office what the legislation requires before you buy your lottery tickets online.
In the US, lottery winnings are regarded as a form of income, which is why they are taxed. If you win the Powerball or Mega Millions, you could see almost 40% of your prize withheld for tax. US citizens have to pay 25% to cover federal taxes, while non-US citizens pay 30% to the IRS before they get their check. Then, each state applies their taxes to your prize. There are a few states that don’t levy any tax at all. But if you buy your Powerball tickets in New York, you’ll have to hand over an additional 8.83% of your prize money.
This is why the American lottery offers winners two options for receiving their money. There’s the once-off cash lump sum in which all the taxes are deducted upfront, or the tax-free annuity option. While winners who opt for the lump sum take home prizes that are much smaller than the advertised jackpots, many experts recommend that players take this option. This is because the taxes are deducted upfront, and you are free to take your money and start investing it.
With the annuity option, players receive an annual payment for 29 years. The money is invested tax-free and paid out by the lottery operator. However, you will still pay income tax on your annual annuities. The problem with this option is that an increase in tax could reduce the value of your annual annuity over the years.
The smartest thing anyone could do if they win the lottery is to pay off their debts. This is a popular answer players give when asked what they would do with their winnings. And experts agree that paying off your home and car is a good place to start. That way you secure your assets and if the money does eventually run out, you don’t risk losing your home. After that, you should look at ways to invest your money so it provides you with a steady and reliable income. Even smaller wins can be invested and grow over time.
It takes most ordinary people some time to get used to their sudden wealth. Winning a Powerball lottery or EuroMillions jackpot is exciting but all that money can be overwhelming. And if you can’t claim your prize anonymously, then you risk being bombarded with requests for assistance. Most lottery winners are very generous and quite prepared to help out friends and family. But you can’t say yes to everyone. Having a tax advisor and a lawyer on your side will make it easier to spend your money responsibly.
Pam has already given a lot of thought to how she’ll be spending her £1 000 000 EuroMillions prize. No doubt fellow theatre enthusiasts will approve of her decision to bring the lighting at the Unicorn Theatre in Abingdon up to standard. And she’ll be able to take time to recover from her upcoming surgery without worrying about the bills. Pam is still buying her lottery tickets every week. She knows that persistence pays off, so follow her example and get your tickets for the next EuroMillions draw today.