SEEING half of a lottery prize pot disappear is likely something a player didn't want to see after claiming their ticket earlier this year.
Massachusetts resident Lucio Tedesco found out he won big on Thanksgiving in 2023.
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He'd purchased a ticket for the state's “Fabulous Fortune” instant game the day before and decided to wait until the holiday to scratch it off, per a release from Massachusetts Lottery officials.
It revealed a life-altering win of $1 million.
Three months later, on January 24, 2024, Tedesco appeared at lottery headquarters in Dorchester on Boston's south side to obtain his prize.
He elected the lump sum distribution of about $650,000 before taxes.
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The decision meant he'd turned down annuity payment disbursements of the pot each year for a designated period.
Tedesco's choice was a common one for many players, resulting in a hefty federal and state tax on the total.
A rate of 24% is set for the federal tax on lottery winnings.
Massachusetts also takes a 5% deduction, but not all states tax the prize pots.
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After deductions, he'd see around half-a-million instead of the whole $1 million.
Still, Tedesco told officials that he'd use the remaining money to pay off the mortgage on his home and make some renovations.
'I've gone through it,' cries $1million lottery winner who lost it all in 8 years - half was gone on the very first dayThe retailer that sold Tedesco his ticket, McKinnon’s Market in Everett, about four miles north of downtown Boston, also saw a $10,000 bonus for selling him the slip.
GONE IN A FLASH
As The U.S. Sun previously reported, a recent North Carolina winner also saw taxes take a significant chunk from their scratch-off winnings.
The lucky player, Patricia Brunson, won $10 million on a ticket she paid $50 for.
North Carolina Education Lottery officials said Brunson decided on the lump sum distribution similar to Tedesco.
Federal and state taxes saw the total drop to $4.3 million — still a considerable amount of money, but less than half of the original pot.
In North Carolina, the tax rate on lottery winnings is slightly higher than in Massachusetts at 5.25%.
The choice between lump sum or annuity payments for lottery winners is highly debated among financial advisors, accountants, lawyers, and other experts.
ANNUITY OR LUMP SUM?
The U.S. Sun has spoken with several on the matter, and many have said that the annuity payment option is actually better for most players.
"Lotto winners would be far better off if they chose the annuity,” wealth advisor Robert Pagliarini told us.
Pagliarini said it decreases the risk of losing the money fast after potentially poor financial decisions.
“You can screw up year after year and make bad decisions. But, by year six or seven, you’re thinking 'I need to make better decisions here,’" he said.
Even so, Lawyer Andrew Stoltmann explained to The U.S. Sun last year that at least 90 percent of the clients he works with who have won the lottery still take the lump sum distribution.
Stoltmann claimed many winners "don't have the infrastructure" to appropriately handle the considerable amount of money they gain.
"They tend to be from lower socioeconomic backgrounds,” the lawyer told The U.S. Sun.
“So they then take this massive sum of money and they just don't really know what to do with that.”
"It's a pretty big mistake," Stoltmann added.
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For more related content, check out The U.S. Sun's coverage of a recent winner who won $5 million on a scratch-off and saw much of it vanish right away.
The U.S. Sun also has everything you need to know about billion-dollar lottery winner Edwin Castro.
