## How Lottery Winnings Affect Your Taxes

The money raised through lottery ticket sales is usually used to benefit a good cause. Ticket proceeds go to state governments which donate a certain percentage of their revenues. Typically, the money is used to benefit public services. Lotteries have been around for centuries. In the Old Testament, Moses used lotteries to distribute land to the Israelites. Lotteries were also used by Roman emperors to give away slaves and property. In the United States, lotteries were first introduced by British colonists, though ten states banned them between 1844 and 1859.

## Odds of winning a lotto jackpot

Chances of winning the lottery are so remote that you’ll probably lose your sense of common sense. However, some people will spend their money on lottery tickets in hopes of winning the jackpot. The odds of winning Mega Millions are one in 88 quadrillion. On the other hand, the odds of being struck by lightning are 250 times greater than winning a lotto jackpot. And chances of getting extra fingers or toes are one in 500 to 1,000.

## Ways to calculate your chances of winning

You can easily compute your chances of winning the lottery using a few simple mathematical equations. In this example, the odds of getting the first and second digit of the lottery winning numbers right are one in 10 and one in ten respectively. If you enter this equation in a lottery, you have a one in 10 chance of winning the jackpot. For more complex calculations, you can use an expanded formula.

## Taxes on lottery winnings

While there are certain ways to minimize your taxes, lottery winnings will limit your tax savings opportunities. While federal tax rules apply across the U.S., state and local tax rules vary from state to state. In many states, the amount of taxes withheld from lottery winnings is more than half of what you actually receive. Below, we’ll take a look at lottery winnings tax laws and how to minimize them.