I was wondering: I live in California. If I bought a lottery ticket in New York, and won, would I pay state tax to NY, CA, NY + CA? And would it matter if it was a state lottery ticket vs one of those mega multi-state lotteries?
Thanks.
If the prize is won after October 1, 2000 and exceeds $5000, you would pay tax to both New York and California.
You would need to file a New York non-resident return and compute the tax due to New York. You would then fill out your California Form 540 and attach Schedule S. On Schedule S, you would compute a credit against your California taxes for the lessser of 1) the tax paid to New York or 2) the California tax on the same amount. In effect, the total tax you would pay to California and New York combined would be the greater of the two tax rates.
If the prize was won before October 1, 2000 or does not exceed $5000, you would pay tax to California only.
If the situation were reversed and you were a New York resident who won the California lottery, you would only pay tax to New York because California exempts California lottery winnings from its income tax.
In the case of multi-state lotteries, what counts is the state you bought the ticket from.
Normally it’s where you earn your money. Professional sports players that play in many different states over the course of a season, pay state income taxes in accordance with the rules of the states they play in…i.e. where they earn their money.
Where you buy the lottery ticket is where you earn your money.