Are Lottery prizes taxable?
D.C. Lottery prizes paid to residents of other jurisdictions may be subject to Federal income taxes and to state and local taxes, depending on the requirements of that jurisdiction. Lottery winnings of $600 or more are reported to the Internal Revenue Service in accordance with Federal regulations. For winnings of more than $5,000, the D.C. Lottery withholds 25 percent of lottery winnings for Federal income taxes. A deduction of 28 percent is withheld if you are unable to provide a valid Social Security number or taxpayer identification number. District of Columbia, state, and local taxes are not withheld from D.C. Lottery prize payments. Federal tax withholding rates are subject to change in accordance with Internal Revenue Service regulations.
Lottery winnings of $600.01 and over are subject to Federal Withholding tax. For winnings of $600.01, up to and including $5,000, you will be issued a W-2G form to report your winnings on your federal income tax form. For winnings of $5,000.01 and over, your state’s Department of Revenue removes the 25 percent federal withholding before you receive your winnings check (or, if it is an annuity, from each winnings check). You then receive a W-2G form with each check to submit with your 1040 form to show that the 25 percent federal withholding already has been paid. In addition to federal tax, your state will make additional withholdings for taxes, and most states will deduct other money that you may owe to the state, such as back taxes, child support, loan payments, etc.
