Forming a Lottery Club? Make Sure You Get it All Straight First
The Mega Millions lottery jackpot has swelled to over $1 billion and you may be tempted to pool your money with friends and coworkers to increase your chances of winning.
But hold the phone. While buying more tickets for Friday night's drawing (7/29) will ever so slightly increase your chances of a win, it could be problematic if indeed your lottery club hits it big.
So what should you do?
Get Everything in Writing
The Michigan Lottery recommends that you should form a lottery club and establish by-laws and appoint a representative even if as few as two people are pooling their money.
Indeed recommends establishing a group leader, outlining a process for members to join the club, and documenting the specific timeline for each drawing as well as the exact amount each member contributes to each drawing. It's also recommended that each member sign an agreement acknowledging their consent to the rules.
The reason? Taxes. If the lottery club wins a prize of $600 or more, you'll have to pay taxes on the prize. If you've established a lottery club, paying taxes on the prize will be a whole lot easier because the tax liability can be spread equally among all members.
It's Complicated If You Win
Here's some important gobbledygook from the Michigan Lottery, in the event a group of two or more people strikes it rich.
"When the club wins a lottery prize of greater than $600, the club will be required to notify the Bureau of State Lottery of all of the individuals receiving a portion of the winnings. This is done by submitting a completed Substitute 5754 Form prior to prize payment. This form requests the name, address, date of birth, phone number, signature and Social Security number for each club member and will be used by the Lottery to issue payments to each club member."