# Tax on lottery winnings **URL:** \ **Category:** Factual Questions\ **Created:** [August 17, 2017, 7:33pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892 "2017-08-17T19:33:08Z")\ **Posts on this page:** 20\ **Page:** 1
**Author:** ![Bones\_Daley](https://avatars.discourse-cdn.com/v4/letter/b/bc8723/32.png) [@Bones\_Daley](https://boards.straightdope.com/u/Bones_Daley)\ **Post date:** [August 17, 2017, 7:33pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/1 "2017-08-17T19:33:08Z")
An advert appeared on my screen today advising that the US Mega -Millions lottery jackpot tomorrow (ie on 18th August 2017) stands at 401 million GBP , and that for the first time ever, it is possible for overseas residents to participate by buying their tickets and selecting their numbers on the internet. Assuming that an overseas resident were in fact to win the jackpot, how exactly would the IRS deal with the tax issue? I assume that the organizers would simply debit the prize money and sent the required amount to the IRS , and send the remainder by bank transfer to the lucky winner. Would there be any room for manoeuvre in the amount to be debited, or is there a statutory deduction, and would this also apply to a non-US taxpayer ? ---
**Author:** ![Duckster](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/duckster/32/1244_2.png) [@Duckster](https://boards.straightdope.com/u/Duckster)\ **Post date:** [August 17, 2017, 7:50pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/2 "2017-08-17T19:50:06Z")
USA lotteries are governed by federal and state laws. Do not trust an unverified advertisement. WAG - It’s a scam. There is no way to verify a “winning” ticket not purchased in person at an approved lottery machine. ---
**Author:** ![Ravenman](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ravenman/32/2929_2.png) [@Ravenman](https://boards.straightdope.com/u/Ravenman)\ **Post date:** [August 17, 2017, 7:59pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/3 "2017-08-17T19:59:34Z")
> [@Bones\_Daley](#): > > Would there be any room for manoeuvre in the amount to be debited, or is there a statutory deduction, and would this also apply to a non-US taxpayer ? Foreign nationals are not exempt from U.S. income taxes on gambling winnings, with almost no exceptions. And the exceptions that exist would be, for example, if a treaty on taxation between the US and whatever country was involved provided for the person to be responsible for taxes in his/her home country. Otherwise, whoever is paying out the winnings (lottery commission, casino, etc) will withhold the required amount and you would have no means to get it back. I have no idea if the ad you’re talking about is a scam or not, but that’s an awfully good question to look into. ---
**Author:** ![boffking](https://avatars.discourse-cdn.com/v4/letter/b/858c86/32.png) [@boffking](https://boards.straightdope.com/u/boffking)\ **Post date:** [August 17, 2017, 8:03pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/4 "2017-08-17T20:03:20Z")
[QUOTE= Maine Bureau of Alcoholic Beverages and Lottery Operation] Can non-U.S. residents play the lottery? Yes, however, U.S. federal law prohibits transporting lottery ticket across the U.S. border. A non-U.S. resident is permitted to play the lottery while traveling through or spending time in Maine. A non-U.S. resident who wins a prize of $600 and over is subject to 30% federal tax and 5% state tax withholding. In January of each year, the Maine State Lottery will issue to a winner of this prize level Internal Revenue Service form 1042-S, Foreign Person’s U.S. Source Income, detailing prize payment and taxes withheld. [/QUOTE] Not sure how other states do it, but here’s how it works in [Maine](http://mainelottery.com/howdoi/index.html). ---
**Author:** ![Johnny\_L.A](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/johnny_l.a/32/1084_2.png) [@Johnny\_L.A](https://boards.straightdope.com/u/Johnny_L.A)\ **Post date:** [August 17, 2017, 8:08pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/5 "2017-08-17T20:08:08Z")
> [@Maine Bureau of Alcoholic Beverages and Lottery Operation](#): > > Can non-U.S. residents play the lottery? > Yes, however, U.S. federal law prohibits transporting lottery ticket across the U.S. border. Huh? I never knew that. Why would it be against federal law to take a ticket across a U.S. border? Why don’t they make it known? ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 17, 2017, 8:52pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/6 "2017-08-17T20:52:12Z")
> [@Bones\_Daley](#): > > An advert appeared on my screen today advising that the US Mega -Millions lottery jackpot tomorrow (ie on 18th August 2017) stands at 401 million GBP , and that for the first time ever, it is possible for overseas residents to participate by buying their tickets and selecting their numbers on the internet. Nitpick. The next Mega Millions drawing, on August 18, is for “only” $20 million, while the next Powerball drawing, on August 19, is for an annuity value of $510 million. Perhaps you were mistaken about the ad you saw or they were lying. ---
**Author:** ![thelurkinghorror](https://avatars.discourse-cdn.com/v4/letter/t/7c8e57/32.png) [@thelurkinghorror](https://boards.straightdope.com/u/thelurkinghorror)\ **Post date:** [August 17, 2017, 10:16pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/7 "2017-08-17T22:16:08Z")
I don’t know about the OP’s ad, and more research should be done. There have been scams like this before, was it an internet ad? How they deal with gambling winnings: a fixed percentage is WITHHELD. Then you file a tax return, which will tell you if you owe more (unlikely unless you have other US income), or get some more money in excess of your actual owed amount. Not sure how this would deal with state tax if you are not a state resident. Typically lottery is nontaxable by a state if bought in the state you are a resident of. And of course it depends on if you take a lump sum or annuity. > [@Dewey\_Finn](#): > > Nitpick. The next Mega Millions drawing, on August 18, is for “only” $20 million, while the next Powerball drawing, on August 19, is for an annuity value of $510 million. Perhaps you were mistaken about the ad you saw or they were lying. 401 GBP is roughly 510 (or 516) USD. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 17, 2017, 10:35pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/8 "2017-08-17T22:35:56Z")
My point was that if they identified the big lottery drawing as the Mega Millions game, they were either sloppy or mistaken. Such a simple mistake makes me suspicious of the claim in the ad. (One of the standard email spam ads is for entering overseas lotteries.) ---
**Author:** ![mhendo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mhendo/32/3159_2.png) [@mhendo](https://boards.straightdope.com/u/mhendo)\ **Post date:** [August 18, 2017, 1:45am UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/9 "2017-08-18T01:45:40Z")
> [@thelurkinghorror](#): > > How they deal with gambling winnings: a fixed percentage is WITHHELD. Then you file a tax return, which will tell you if you owe more (_ **unlikely unless you have other US income** _), or get some more money in excess of your actual owed amount. Emphasis mine. Actually, in some states, it is VERY likely that you would owe more in taxes than the witholding. In California, for example, the CA Lottery: > [@](#): > > is required to withhold federal taxes of 25% for U.S. Citizens and Resident Aliens providing a social security number, and 28% for U.S. Citizens and Resident Aliens not providing a social security number. That level of withholding will leave you well short of your obligations to Uncle Sam on a multi-million dollar payout. ---
**Author:** ![Weisshund](https://avatars.discourse-cdn.com/v4/letter/w/ba8739/32.png) [@Weisshund](https://boards.straightdope.com/u/Weisshund)\ **Post date:** [August 18, 2017, 2:38am UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/10 "2017-08-18T02:38:25Z")
> [@mhendo](#): > > In California, for example, the CA Lottery:That level of withholding will leave you well short of your obligations to Uncle Sam on a multi-million dollar payout. I’d have them withhold 50% and tell them, there have a nice day, go do something useful with any overage (which probably wouldnt be much on 510mil) ---
**Author:** ![Derleth](https://avatars.discourse-cdn.com/v4/letter/d/b9e5f3/32.png) [@Derleth](https://boards.straightdope.com/u/Derleth)\ **Post date:** [August 18, 2017, 4:37am UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/11 "2017-08-18T04:37:11Z")
> [@Johnny\_L.A](#): > > Huh? I never knew that. Why would it be against federal law to take a ticket across a U.S. border? **Why don’t they make it known?** That _is_ making it known. You’re presumed to know it, therefore it is known. You’re also presumed to know laws such as building codes, which are private property of the code organizations which claim copyright over them and charge for access. [Here’s a video about that.](https://www.youtube.com/watch?v=fht7mujzeC8&feature=player_embedded) Happily, [people are pirating the codes and giving them away for free on the Internet](https://law.resource.org/) because somehow, it’s a lot cheaper than $1,100 to send a PDF over the Internet. Crazy and thieving, I know, even if it might technically be legal. ---
**Author:** ![Bones\_Daley](https://avatars.discourse-cdn.com/v4/letter/b/bc8723/32.png) [@Bones\_Daley](https://boards.straightdope.com/u/Bones_Daley)\ **Post date:** [August 18, 2017, 12:45pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/12 "2017-08-18T12:45:04Z")
Just FTR , this is the outfit who sent the ad to which I referred in the OP … > **[Home of the world's biggest jackpots](https://www.lottogo.com/en/noaccess)** > > Home of the world's biggest jackpots ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 18, 2017, 1:15pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/13 "2017-08-18T13:15:28Z")
That site still says the Mega Millions jackpot is £401 Million, although the [actual site](http://www.megamillions.com/) shows a jackpot with an annuity value of $20 million. In short, I would trust nothing that website is telling you. ---
**Author:** ![Evan\_Drake](https://avatars.discourse-cdn.com/v4/letter/e/b487fb/32.png) [@Evan\_Drake](https://boards.straightdope.com/u/Evan_Drake)\ **Post date:** [August 18, 2017, 1:24pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/14 "2017-08-18T13:24:02Z")
No, most foreign nationals will not have to pay most gambling taxes. But they _may_ have to pay taxes on lotteries. It will certainly be withheld, whether or not one gets a refund. It would be best to immediately hire a skeevy lawyer or tax accountant in the state where you won. A recent similar **[thread](http://boards.straightdope.com/sdmb/showpost.php?p=20352431&postcount=57)**, with this link: **[Is the U.S. System of Taxing Gambling Winnings Fair?](http://www.osga.com/artman/publish/article_9760.shtml)** _Thanks to a tax treaty between the United States and several European and Asian countries including Austria, Bulgaria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russian Federation, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom, anyone who wins money at a U.S. casino or other gambling establishment can get a full refund on taxes withheld at the source._ Maybe it does or does not apply to lotteries, depending on the rules of each… > **[Gambling Winnings Tax on Foreign Nationals | US Tax Return and IRS](https://www.artiopartners.com/nonresident/gambling-winnings-tax-foreign-nationals/)** > > What is Gambling Winnings Tax on Foreign Nationals? How to claim a tax treaty and tax refund for nonresidents? What is form 1040NR? Expat Tax CPA Services.  Of course while gambling winnings aren’t taxed, or taxed much in most countries, an American winner will still be liable to the IRS if he wins abroad. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [August 18, 2017, 5:32pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/15 "2017-08-18T17:32:51Z")
> [@mhendo](#): > > …Actually, in some states, it is VERY likely that you would owe more in taxes than the witholding. > > In California, for example, the CA Lottery: > > > [@](#): > > > > is required to withhold federal taxes of 25% for U.S. Citizens and Resident Aliens providing a social security number, and 28% for U.S. Citizens and Resident Aliens not providing a social security number. > > That level of withholding will leave you well short of your obligations to Uncle Sam on a multi-million dollar payout. I know you got the quote from the CA lottery, but the info they’re quoting is federal law and would be applicable to any lottery win in the US. CA having a non-trivial state income tax I imagine the CA tax authority would want to withhold another dollop for themselves from any CA resident winning any CA lottery. How they’d treat a US citizen who’s not a CA resident or a non-US citizen is beyond me. The CA Franchise Tax Board (if that’s still its name) has a rule and the means to enforce it, that’s for sure. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [August 18, 2017, 6:02pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/16 "2017-08-18T18:02:44Z")
Except that the [lottery is exempt from California state income tax](http://www.sacbee.com/news/state/article54540405.html). ---
**Author:** ![Blakeyrat](https://avatars.discourse-cdn.com/v4/letter/b/ecd19e/32.png) [@Blakeyrat](https://boards.straightdope.com/u/Blakeyrat)\ **Post date:** [August 18, 2017, 6:08pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/17 "2017-08-18T18:08:18Z")
> [@Bones\_Daley](#): > > An advert appeared on my screen today advising that the US Mega -Millions lottery jackpot tomorrow (ie on 18th August 2017) stands at 401 million GBP , and that for the first time ever, it is possible for overseas residents to participate by buying their tickets and selecting their numbers on the internet. Really. I am incredibly dubious. I think someone’s trying to take your money in exchange for an email after the drawing that reads “oops you didn’t win, sorry”. Since the odds of the numbers you chose (and can you even choose Mega Millions numbers? Thought they were always randomized) being the winning numbers are astronomical, they should have no problem getting away with this scam. EDIT: and yes, now that I’ve followed the link you provided, they can’t even get the _name_ of the lotto game correct. I wouldn’t trust this site one tiny bit. ---
**Author:** ![mhendo](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mhendo/32/3159_2.png) [@mhendo](https://boards.straightdope.com/u/mhendo)\ **Post date:** [August 18, 2017, 6:19pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/18 "2017-08-18T18:19:45Z")
> [@LSLGuy](#): > > CA having a non-trivial state income tax I imagine the CA tax authority would want to withhold another dollop for themselves from any CA resident winning any CA lottery. How they’d treat a US citizen who’s not a CA resident or a non-US citizen is beyond me. The CA Franchise Tax Board (if that’s still its name) has a rule and the means to enforce it, that’s for sure. As **Dewey Finn** notes, there’s no state (or local taxes) on lottery winnings in California. ---
**Author:** ![obbn](https://avatars.discourse-cdn.com/v4/letter/o/d6d6ee/32.png) [@obbn](https://boards.straightdope.com/u/obbn)\ **Post date:** [August 18, 2017, 6:41pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/19 "2017-08-18T18:41:01Z")
I wouldn’t bother. The winning ticket has already been purchased, it’s right here in my wallet! I’m going to buy a blimp. No, two blimps. Bumper blimps! ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [August 18, 2017, 7:05pm UTC](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892/20 "2017-08-18T19:05:19Z")
> [@Dewey\_Finn](#): > > Except that the [lottery is exempt from California state income tax](http://www.sacbee.com/news/state/article54540405.html). > [@mhendo](#): > > As **Dewey Finn** notes, there’s no state (or local taxes) on lottery winnings in California. Cool. Thanks. Haven’t lived there in a very long time. Knowing their revenue struggles since, well, I was a kid and Prop 13 was new, I’m surprised to hear this. On a related note: I wonder how many states that have income taxes exempt lottery winnings? And do they exempt only tickets sold by their own state lottery agency or any/all winnings? [Next page](https://boards.straightdope.com/t/tax-on-lottery-winnings/793892.md?page=2)