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How are lottery winnings taxed?
If you win the lottery and the feds take 25% and possibly your home state takes a certain percentage (in my case - 5%), of the total sum, then you get your prize money.
When you file your taxes that year, do you have to pay tax on the winnings you received AFTER state and federal taxes (as it's considered income) ?
3 Answers
- LegFuJohnsonLv 78 years agoFavorite Answer
You are taxed on the prize money you won. You see how much taxes you owe.
Then you'll deduct how much the government already took. If you owe more, you pay the extra. If they took too much, then you get a refund.
No different than your paycheck from work.
- SlickterpLv 78 years ago
As regular income. No, you pay taxes on the entire anmount, with the withholdings credited towards your tax liability, just like if you had earned it at a job and they had withheld taxes.
- Anonymous8 years ago
better to ask in this section, its where the tax experts hang out:
http://answers.yahoo.com/dir/index;_ylt=Ah_xDfR1j3...
my guess is your assumption is wrong about being taxed before your winnings are given. i think if for example you take the lump sum payout the lottery will issue that full amount minus the lump sum acceptance "penalty". then when you file your taxes theres a special section to report those winnings. so they are not gonna tax you twice or anything.
