AUSTIN, Texas - It has been a very lucky few days for some Central Texans.
One of the winning tickets for the $1.8 billion Powerball jackpot was sold at a convenience store in Fredericksburg. And in Austin, another player scored a one million dollar prize.
The backstory:
The $1.8 billion jackpot is the second largest in Powerball history. With another winning ticket sold in Missouri, those two lucky players will split the grand prize.
Luck was on Texas’ side this week.
One ticket sold at Big's in Fredericksburg matched all six numbers to win the $1.8 billion Powerball jackpot, ending a 40-plus-week-long winning drought.
"Shocked, mind blown, I wasn’t expecting it," said Melanie Carter, the store owner.
Here’s how the payout works
Winners can choose the annuity option, 30 payments over 29 years, or one lump sum cash payment. That decision is made at the time they buy the ticket.
"You have more options if you take a lump sum because you can invest it, you can do some charitable stuff, you can, depending on what your family needs are, whether you're trying to put kids through college, whether your truck's breaking down and you need a new truck. There are all kinds of uses for immediate money," said Steve Cotton, President, Cotton Wealth Management Associates.
So what’s the better deal?
The Texas lottery says when the winner claims the prize, they get one initial payment, followed by annual installments for the next 29 years, which increase by 5% each year.
The annuity option for the winner would be an estimated $894 million each before taxes over 30 years.
In this case, the Texas winner opted for the lump sum, worth about $410.3 million before taxes.
The Texas Lottery says 24% will be withheld for federal taxes upfront. But, depending on individual tax situations, the final bill could be even higher come tax time.
"The top tax bracket rate is 37 percent, and that's where this amount of money will line up. So, when the dust all settles in this situation, federal taxes alone are going to eat up about $152 million of the winnings. So that leaves what? $258 million," said Chad Silver, Tax Attorney.
"The takeaway from this is even though it's a $1.8 billion boom, the actual pocket amount is really in the $240 to $260 million range for this winter, still life changing. But the IRS is always the biggest winner here," said Silver.
Financial experts say before making any moves, winners should build a team.
"Working with a tax professional, an investment professional, and probably an estate planning attorney, if you get those three key professionals in your corner and you sit down with them before you make any decisions, they can really help position you to protect you, achieve the goals of your family, and make sure that you end up being a good steward of this, and you don't. You don't just spend it away," said Cotton.
Other big winners
And Texas had more than just the Jackpot winner.
A $2 million ticket was sold in Tyler, and another $1 million winner was in Midlothian.
In Austin, a player matched five of six numbers, scoring a $1 million prize.
"Even if you didn't win the big jackpot, you should always check your numbers. There are literally hundreds of thousands of winning tickets associated with this, with Saturday's drawing ranging from $4 up to the jackpot prize," said Glenn Neal with the Texas Lottery.
Saturday’s Powerball drawing revealed the winning numbers for a staggering $1.8 billion jackpot, the second-largest in lottery history.
The Austin and Fredericksburg winners have yet to come forward. They have 180 days to claim their money.
"The tax year is almost over. So, we don't have a lot of time to do tax planning. So, we've got four months and maybe even less when they finally realize the income and that's very, very little time to get your finances in order to handle this. Large lump sum and figure out how to shelter the remaining amounts properly," said Silver.
The store that sold the Jackpot ticket — Big's in Fredericksburg — is also cashing in, eligible for a $250,000 bonus.
The Source: Information from interviews conducted by FOX 7 Austin's Jenna King