What are the tax requirements on lottery winnings?
Lottery winnings are considered taxable income. Whether received in a lump-sum payment or in multiple annual payments, the winnings are taxed as received. Federal and State withholdings vary. In addition, the prize money may count as taxable income in both the winner’s home State and the State where the ticket was purchased. Seek professional advice. (Learn more.
US residents are responsible for taxes on winnings, including federal, state, and local taxes. Non-US residents are also subject to US taxes but taxes can be refunded to residents of countries with USA tax treaties (over 100 countries worldwide). No matter which option the winner selects, the Michigan State Lottery automatically withholds estimated income taxes for federal (25 percent) and state (3.9 percent), on all prizes over $5,000.
