Tonight's Powerball drawing is $304 million*. If your numbers don't come up, or even if they do, you can check out Mega Millions' drawing on Friday, Aug. 27, for a jackpot that by then will be more than the current $288 million**.
*UPDATE, Thursday, Aug. 26, 2021: No big winner last night. That pushes the Powerball jackpot for Saturday's, Aug. 28, drawing to, right now, $322 million.
**UPDATE, Saturday, Aug. 28, 2021: Stop me if you're heard this, but no big Mega Millions winner on Aug. 27. That means the Tuesday, Aug. 31, jackpot will be at least $306 million.
Of course, when you win that much money, you're going to pay a substantial chunk of it to the U.S. Treasury and, depending on where you live, your state tax collector.
That's why it's not surprising that some folks look for any way to avoid the tax bite on their gambling winnings.
It's also no secret that law enforcement agencies keep a close eye on lotteries, for tax evasion and other reasons.
Such scrutiny paid off this week when three Massachusetts were indicted on federal tax evasion and money laundering charges in connection with millions of lottery winnings that weren't theirs.
Lottery and tax cheating charges: Ali Jaafar and his sons Yousef and Mohamed each are charged with one count of conspiracy to defraud the Internal Revenue Service, one count of conspiracy to commit money laundering, and multiple counts of filing false tax returns.
The U.S. Attorney's Office in Massachusetts announced on Tuesday, Aug. 24, that the trio used a "ten-percenting" scheme in which they allegedly purchased, in cash, thousands of winning Massachusetts Lottery tickets at a discount of between 10-and-20 percent of each ticket’s value from the real ticket buyers.
That allowed the individuals who bought the winning tickets to avoid reporting the winnings on their tax returns.
The Jaafars then allegedly presented the winning tickets to the Massachusetts Lottery Commission as their own and collected the full value of the jackpots. Federal officials also allege that the Jaafars reported the ticket winnings as their own on their income tax returns. To avoid the tax bill that the winnings created, the men allegedly offset the claimed winnings with purported gambling losses.
Mass. Lottery's massive interest: Federal court documents allege that the Bay State trio cashed more than 13,000 lottery tickets and claimed more than $20,989,284 in Massachusetts lottery winnings between 2011 and 2019.
Based upon their submitted lottery claims, investigators say that 62-year-old family patriarch Ali Jaafar was the top individual lottery ticket casher in Massachusetts in 2019. His older son, 30-year-old Mohamed Jaafar, was the third highest individual ticket casher, and Yousef Jaafar, 28, was the fourth highest individual ticket casher.
In addition to the federal law enforcement, which included members of the U.S. Department of Justice and the IRS' Criminal Investigations division, officials with the Massachusetts State Lottery Commission were part of the years-long investigation.
State lottery rules require a winner to swear under the penalties of perjury that they are collecting the money only for themselves, not for someone else. Lottery officials then check to see if the person claiming the prize has outstanding child support payments or other fees and fines due the state.
"This type of activity has a lot of negative ramifications on multiple fronts, and we take that responsibility seriously," Michael R. Sweeney, executive director of the lottery, told The Boston Globe. "It has our absolute attention. It goes to the integrity of the Lottery."
Sweeney also told the newspaper that "too many" people still are participating in the scam, and that " the public should be expecting more news very shortly."
No luck keeping winnings secret: The tax angle in the Massachusetts' criminal investigation is just one reason some lottery winners want to keep their identities secret.
Other winners, especially of huge jackpots, also want to avoid the hangers-on that invariably appear as soon as the photos with the oversized checks are published. Friends, neighbors, and even heretofore unknown relatives suddenly try to ingratiate themselves into the new multimillionaires' lives.
This unsolicited entourage appears in most states because public records laws require lottery winners to be identified. The key rationale, as noted by the Massachusetts Lotter official, is that the disclosure will, among other things, guarantee the integrity and transparency of the lottery process.
A handful of states, however, allow their lottery winners some privacy. Winners in 11 states can remain anonymous when a winning ticket was purchased within their borders. The states are Arizona, Delaware, Georgia, Kansas, Maryland, New Jersey, North Dakota, Ohio, South Carolina, Virginia, and Texas.
Wherever you happen to live when your numbers come up, there are some moves you need to make to deal with the tax, other financial, and privacy, or lack thereof, aspects of being a million-dollar lottery winner. Check out my post 6 tax & financial tips for the next lottery millionaire for details.
Yes, being rich does have its own set of problems. But at least you have plenty of money to help you deal with them!
You also might find these items of interest:
- Tax scores upset win, this time in horse race, not Congress
- State lotteries' appeal increases during COVID-19 lockdowns
- Reporting all your income, including gambling winnings, on Form 1040 Schedule 1
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