Tax Requirements for Lottery Prizes

The Texas Lottery Commission is required to report lottery winnings over $600, or when the prize is at least 300 times the amount of the per board wager, to the Internal Revenue Service.

For prizes over $600, the Texas Lottery Commission is required to withhold 24% for lottery winnings, less the wager.

Examples:
* If you purchase a $50 ticket that wins a prize of $5,007, taxes would not be automatically withheld because the gross proceeds are less than $5,000, ($5,007 - $50.00 = $4,957).
* If you purchase a $50 ticket that wins a prize of $5,100, taxes will be automatically withheld because the gross proceeds exceed $5,000, ($5,100 - $50 = $5,050).

Non-U.S. Citizens/Residents. For lottery winners who are not citizens or residents of the United States, the Texas Lottery Commission is required to withhold 30% in federal taxes for prizes over $600.

Please note: the IRS considers an alien individual meeting either the Green Card test or the Substantial Presence test for the calendar year, to be a resident alien for tax purposes. If considered to be a resident alien by the IRS for tax purposes, the Texas Lottery Commission will use the same reporting and withholding requirements as a U.S. citizen. For further information, see IRS Publication 519, U.S. Tax Guide for Aliens.

Tax Returns. According to the Internal Revenue Service, winnings from lotteries and raffles are considered gambling winnings. After the end of the year, the Texas Lottery will send each winner a Form W2-G report showing the amount of lottery prize payments to be reported as income and the amounts of federal and state taxes withheld to be reported as credits on the winner’s federal and state tax returns.

Additional Information. Additional information about taxation on lottery winnings can be found on the Internal Revenue Service website. If you have any questions, please consult a professional tax adviser.

How Do You Pay Taxes on Lottery Prizes Won through theLotter Texas?

Lottery prizes up to $600. Lottery prizes of up to $600 will be paid to winners shortly after receipt of the prize money from the Texas Lottery. No taxes are due on lottery prizes under $600.

Lottery prizes over $600. All lottery prizes of $600 and up are collected by the winners personally at offices of the Texas Lottery.

The Texas Lottery Commission withholds taxes on all lottery prizes over $600 as detailed above.

theLotter Texas takes no commission on lottery prizes.