The rest of the winnings are expected to be paid by the winner when filing the return.įive states, Alabama, Alaska, Hawaii, Nevada, and Utah, do not take part in the national lottery. Before the winner receives any of the money, however, the IRS automatically takes 24% of the winnings. Winnings are taxed the same as wages or salaries are, and the total amount the winner receives must be reported on their tax return each year.
Lottery winnings are considered ordinary taxable income for both federal and state tax purposes. Like other income in the United States, the IRS taxes lottery winnings.
There’s no doubt that winning the lottery is exciting and can significantly help the winner financially however, the winner must not be too quick to spend all of their winnings.
