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When you win the lottery, you usually have two options for receiving your winnings: a lump-sum fee or an annuity payment. Each choice has totally different tax implications. A lump-sum payment contains the complete prize amount upfront, leading to the next instant tax burden. On the other hand, annuity funds unfold out your winnings over several years, which may keep you in a lower tax bracket. However, you'll eventually need to account for the entire quantity received. Understanding these ramifications is prime to deciding which option aligns best along with your financial situation.
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