Winning a lottery is something we all have dreamt of at some point in our lives. Some people with a passive mindset are hesitant to buy a lottery ticket, but a significant population still gets them to try their luck.
Conventionally most people either win a car or a cash prize in a lottery, and if one day you wake up and get the news that you are one of the lucky winners and get an option to choose between a lottery cash prize and a Porsche, what will you do?
Your heart says Porsche, but your mind tells you to take the cash prize. Confusing right? We all are the same, but today we have taken an in-depth look into this matter to ensure you won’t make a rash decision if you did win a jackpot one day.
Car or Cash Prize- What’s Better?
Did you know a typical US citizen spends over $1k annually on lotto tickets? This skyrocketing popularity is because of the perks that come with winning a lottery, but should winners take the cash prize or a car if they win?
This is one of the commonly asked questions by lottery enthusiasts, but to be honest, there is no definite answer to this question. It’s entirely subjective, but we must know what happens after choosing a specific option.Let’s dig into this to help you make an informed decision if you see your name in the list of the lucky ones some day.
The Cash Prize-What to do?
Are you thinking of planning a world tour or buying an apartment in Paris as the first thing after winning the lottery? That’s a natural human response, but we must always be responsible for money no matter how much we have it because if you don’t manage it, you might end up like those unfortunate lottery winners who lost all the money just because they didn’t plan well.
● Protect Your Lottery Ticket:
The initial precautionary step is to take care of your lottery ticket, which is the ultimate gateway to the big fortune. If you lose it, you are just like another person who didn’t win. Make hard copies and digital scans of the ticket and save it in multiple safe places, and the best thing is to put the original in a bank locker.
● Don’t Rush To Claim The Prize:
To avoid unwanted attention from your fake old friends, relatives, or media, it is best not to claim the cash prize urgently. Take your time and claim at the best time as you are allowed to receive the money within three months and sometimes up to a year, depending on the place where you win.
● Hire a Professional Tax Attorney:
Winning a cash prize in a lottery also comes with a lot of obligations. It’s recommended to hire a tax attorney to guide you about the pros and cons of different ways how you can withdraw the win money. Let the tax gurus guide you on whether you should choose an annual payout or take all the cash at once.
● Plan Your Future Wisely:
Winning a lottery cash prize doesn’t mean you don’t have to work anymore or lavishly spend all the time. You can make healthy lifestyle changes and start working on something you enjoy or start your long-awaited startup. Invest your money correctly and if you have debts, pay them first to become mentally stress-free. If you have kids or planning to support someone to get the education of their dreams, start a college fund. You can do tons of great things for yourself, your kids, and society with the cash prize. Plan sensibly.
The Car Option- What’s next?
Winning a brand new vehicle in a lottery is no less than a blessing seeing the dramatically increasing vehicles’ prices. You are thrilled, pleased about the win, but there are specific required steps to get possession of the new car. When you win a car in a lottery, you have to pay the taxes yourself, and managing them on your own is quite a task. If you don’t know how to pay for the prized car taxes but still don’t want to take the cash prize, we have jotted down some essential points on how to manage them.
● Let A Professional Handle The Taxes:
There is nothing better than a professional’s advice when it comes to taxes. Most people are not well equipped with the tax rules and might end up making the wrong decision. A tax attorney can help you to weigh out the options and prepare well for the taxes.
● Take Your Time To Plan
The verification process after winning the car is rigorous, which is also great for you as a winner because you can plan how you will pay for the taxes. You are not liable to pay them right after the win but only after you take the possession, so don’t panic, talk to your tax consultant to devise a plan for you.
Taxes are paid on the Fair Market Value of a vehicle, so if you get possession of the car after a significant allowed period, there is a chance the FMV is lower than the retail prices as the car value is decreased when new models are released. This might reduce the taxes too.
● Alternatives Ways To Pay Taxes:
You can always save money and cut out your expenses to pay for your new vehicle’s taxes. Get a safe amount of secured car loan if you plan to pay only for the taxes with the loan money and getting it on a new vehicle is relatively easy. The last and the most suitable option is to sell your old car, if you own any, to bear the tax expenses and enjoy your new ride completely debt free.
● Opt For The Cash Prize:
If you really don’t want to deal with all these hassles and have an option to take a cash prize, You can conveniently go for the cash prize if it is equal or higher than the Fair Market Value of your prized car.