The tax withholding rate for a nonresident alien is 30 percent on prizes of $600 or more. However, for a $50.00 ticket with a prize of $5,100.00, taxes will be automatically withheld because the gross proceeds exceed $5,000, ($5,100.00 - $50.00 = $5,050.00).īecause the amount of taxes owed by an individual is different for each individual winner, the winner should consult a legal or financial tax expert to determine his or her tax liability.Īny individual who is not a citizen or resident of the United States is a nonresident alien individual. Prize withholdings are calculated on the total amount of gross proceeds (the amount of winnings minus the amount wagered).įor example, if you purchase a $50.00 ticket that has a prize of $5,007.00, taxes would not be automatically withheld because the gross proceeds are less than $5,000, ($5,007.00 - $50.00 = $4,957.00). The tax withholding rate is 24% for lottery winnings, less the wager, for prizes greater than $5,000.Īn example of the calculation used to determine whether a prize winning exceeds the threshold for required withholding is detailed below: The winnings are subject to federal income tax withholding (winnings greater than $5,000.00).$600 or more in winnings when the payout is at least 300 times the amount of the per board wager,.citizens, the Federal Government requires the Texas Lottery Commission to report the following lottery winnings to the IRS:
