The largest lottery winner ever is Edwin Castro, who won a record $2.04 billion Powerball jackpot on November 7, 2022, with a single ticket sold in California. He claimed the prize in February 2023 and chose the lump-sum option, receiving a check for $997.6 million before taxes.
Edwin Castro's lottery ticket matched all five numbers plus the Powerball to win $2.04 billion, the largest lottery jackpot in U.S. history. He publicly claimed it at California Lottery headquarters on Feb.
For a $5,000 lottery win, the IRS requires a mandatory 24% federal withholding, meaning about $1,200 is taken upfront, leaving you with roughly $3,800, but you'll likely owe more at tax time as your total income (including the winnings) could push you into higher tax brackets (up to 37%). You must also pay state income tax (if applicable in your state, as some like CA, FL, TX don't tax winnings) and may receive a Form W-2G to report it, potentially needing to pay the difference when you file your annual return.
The biggest mistake a lottery winner can make is failing to immediately assemble a professional financial and legal team and acting impulsively, leading to rapid depletion of wealth through overspending, bad investments, tax issues, or succumbing to requests for money, often compounded by making the win too public. Rushing into big life decisions, quitting jobs too soon, and not accounting for significant tax implications are critical errors that can ruin a life-changing fortune quickly.
Yes, you can claim Powerball anonymously in some states, but it depends entirely on your state's laws, with many states requiring public disclosure, though some offer loopholes like claiming through a trust or LLC to protect your identity. About 19 states allow winners to stay anonymous, with some requiring a minimum prize amount, while others don't, and the rest mandate public disclosure.
Applied to the full annuity, this yields: Total annuity jackpot: ~$1.817 billion. Estimated total federal and state taxes: ~$750–$765 million. Estimated total after taxes over 30 years: ~$1.05 billion to $1.07 billion.
Receiving $1,000 a day for 20 years amounts to $7,300,000 ($1,000 x 365 days x 20 years) if you don't account for leap years, or about $7.3 million before taxes and investment growth, making it a substantial sum that's often compared to a lottery's $5 million lump sum option (which would be ~$3.65M after tax). However, this total doesn't include interest or inflation, and if invested, the final amount could be significantly higher, potentially reaching over $10 million depending on returns.
Jerry and Marge Selbee legally won around $26 to $27 million over nearly a decade by exploiting a loophole in state lotteries, particularly Michigan's WinFall, turning their winnings into roughly $8 million in profit after taxes, which they used to help their family and community. They didn't cheat but used math and large ticket purchases during special "roll-down" periods when jackpots rolled down to lower-tier winners.
California: $2.04 billion on November 8, 2022. California: $1.765 billion on October 11, 2023. Tennessee, Florida, and California: $1.586 billion in January 2016 (split three ways)
Understand that your name is still public and reportable. If you are concerned about people trying to contact you, consider changing your cell and home phone numbers or allowing your voicemail to pick up calls for a few days. An attorney can help protect you and your assets.
Neither a lump sum nor an annuity is inherently better; the best choice depends on your financial situation, risk tolerance, and goals, with annuities offering guaranteed income for longevity but less flexibility, while a lump sum provides control for investment and estate planning but carries higher risk of mismanagement or outliving funds. Annuities suit those needing predictable income and security, while a lump sum suits disciplined investors with other income streams or specific estate planning needs, though it comes with major tax implications and potential for overspending.
As the winner, you can appoint yourself as a trustee. However, appointing another individual will protect your privacy. You will then name beneficiaries to the trust, which may be your family members or just yourself. Lottery winners often set up individual trusts for each family member.
State taxes on lottery winnings
There are also state taxes in most jurisdictions, which range from 2.9% in North Dakota to 10.9% in New York. But if you're lucky enough to live in California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington or Wyoming, you won't pay any state taxes on your winnings.
The biggest mistake a lottery winner can make is failing to immediately assemble a professional financial and legal team and acting impulsively, leading to rapid depletion of wealth through overspending, bad investments, tax issues, or succumbing to requests for money, often compounded by making the win too public. Rushing into big life decisions, quitting jobs too soon, and not accounting for significant tax implications are critical errors that can ruin a life-changing fortune quickly.
In many states, lottery winners must go public. A trust can claim the prize instead, allowing the winner to stay anonymous (where legally allowed). Whether you can choose to remain anonymous after a lottery win depends on your state.
Do lottery winnings count as earned income for Social Security purposes? Lottery winnings are not considered earned income, no matter how much work it was purchasing your tickets. Therefore, they do not affect your Social Security benefits.