Unless you’ve been living under a rock, you know that the Mega Millions jackpot rose to an astounding, and record-breaking, $1.537 billion. That’s almost the most money any Mega Millions lottery has ever given away. And, unfortunately for millions of Americans across the country, there is only one sole winner of the grand jackpot: a South Carolina citizen who is, as of this writing, still unidentified. Should this private citizen take their winnings in one lump sum, he or she will earn a whopping $878 million.
Although you can no longer win that mind-bogglingly large amount of money, it’s still fun to think about what could have been. It poses a great question: what would you do with that much instant money? Is there a responsibility to do some good and give back to your community? If so, you’d think that it would be fairly simple to donate to charity, right? Not necessarily. If you ever did win the lottery and felt compelled to donate vast sums of money to charity, here are some things you should know before doing so.
Find Qualified Charities
There are no federal or state laws that limit the amount of charitable donations one can make, however, there are limits to how much of those donations are tax-deductible. But before you can even consider donating those lottery winnings, you’ll need to first choose a legitimate charitable organization. So, how do you do this? Luckily, the IRS offers a handy database of all charitable organizations that are deemed qualified to receive tax-deductible contributions. If you win the lottery and want to donate, make sure to do your research, otherwise the IRS will make sure to charge you for your “tax-deductible” donations.
You Must Report Lottery Donations
Some people actually believe that, if you donate some of your lottery winnings to charity, that you won’t have to pay taxes on your winnings. This is absolutely untrue. Your winnings already have money withheld by the lottery agency before you even receive them, and you can’t make donations to charities to avoid anymore taxes. Additionally, you absolutely must report your entire winnings to the IRS as income when filing your taxes. The last thing you want is Uncle Sam rapping at your door.
Donate Through a Third Party
Stop and consider before you donate to charity in your own name, especially if the donation is sizeable. Donating in your name will only make those charities continue to reach out, not to mention any other charities, should they look up your donation records. If anonymity is what you’re looking for, then you might want to consider donating that money through an attorney or a blind trust.
You have roughly a 1 in 3 million shot at winning the lottery. If you’re one of the lucky few to receive a jackpot, especially one as large as this recent Mega Millions jackpot, take some of those winnings and give back to your community. But be careful when you do so. Don’t assume anything, do your research, and make sure to file taxes accordingly.