How much in taxes is withheld from each Lottery prize?
As required by Idaho law, the Lottery automatically deducts Federal and State income taxes from your winnings of prizes over $5,000. The Federal tax rate is 24% and the State of Idaho tax rate is 6.925%. The Lottery is also required to report winnings of $600 or over to the IRS, although they do not deduct taxes until the prize exceeds $5,000.
When you receive your check, you will also receive three copies of your W-2 G forms detailing your taxed amount. You should keep these tax records safe until the following year when you will be required to use them. One copy is for your Federal taxes, one copy is for your State of Idaho taxes, and one copy is for your personal records.
For specific tax information, the Idaho Lottery suggests all winners consult a professional tax accountant, attorney or advisor.
If a group or pool of players claims a large prize, does every member pay taxes?
When large groups of players claim a large jackpot prize, each player shares in the tax liability equally. Taxes are removed at a rate of 24% Federal and 6.925% Idaho tax. Each claimant receives their W-2 G forms, which detail their tax liability along with a check for their portion of the remaining money.
If a group selects an annuity, taxes are removed each year based upon current tax laws before preparing the winners’ annual checks. The Idaho Lottery must pre-pay taxes on winning amounts consistent with current Federal and State tax laws.
Do I have to pay Idaho taxes if I live in another state and win?
Any person, 18 years of age or older, who legitimately purchases a lottery ticket in Idaho and wins, may claim the top jackpot prize. You do not have to be an Idaho resident or a citizen of the USA to play and win. The only difference between these players and Idaho residents is how you claim your winning prize and handle your tax liabilities.
Non-Idaho residents claim their winnings as a non-resident United States citizen. You must present photo identification that establishes your location of legal residency. During the following year in April, you will need to file an income tax return for all monies earned (winnings included) in the State of Idaho.
United States citizens may also receive a credit on their state of residence income tax return for the monies you have paid to the State of Idaho. You will want to confer with your tax advisor on whether you owe any additional taxes on this income in your resident state.
If I live in another country and win the Idaho Lottery, how do I pay my taxes?
Jackpot or large-tier winners who live in countries other than the United States of America are considered non-resident aliens. Upon presentation of your winning ticket, you must also demonstrate with legal photo identification documentation of your country of residence.
Non-resident aliens have a slightly higher tax rate withheld from their winnings at the Federal level – 30% as opposed to 24% for United States citizens. The Idaho withholding rate remains unchanged at 6.925%.
Non-resident aliens of the United States of America who earn money in the United States (including lottery winnings) are required to file a non-resident United States tax return and to file a non-resident Idaho tax return. You will want to consult a tax advisor in your resident country and one in Idaho to ensure that your taxes have been paid or credited appropriately.
Can a player write-off Lottery losses on federal taxes?
If $600 or more is won on a single wager, the Lottery is required to report those winnings to the IRS. The Lottery is not qualified to give advice on matters regarding taxation. While there may be occasions where lottery losses may be used to offset lottery winnings, a definitive answer is available only through a qualified tax specialist. Players are encouraged to consult a tax professional regarding this matter.