Tax Requirements for Lottery Prizes
The New Jersey Lottery is required to report all prizes of $600 or more to the Internal Revenue Service.
Federal Income Tax. Federal law requires the New Jersey Lottery to withhold 24 percent from any prize in excess of $5,000. A higher federal withholding rate of 30 percent applies to any prize of $600 or more paid to a winner who does not furnish a taxpayer identification (social security) number.
New Jersey Gross Income Tax. State law requires the New Jersey Lottery to withhold State tax at the rate of 5 percent from any prize in excess of $10,000 and up to $500,000 or 8 percent from any prize in excess of $500,000. The higher State withholding rate of 8 percent also applies to any prize in excess of $10,000 paid to a winner who does not furnish a taxpayer identification (social security) number.
Tax Returns. According to the Internal Revenue Service, winnings from lotteries and raffles are considered gambling winnings. After the end of the year, the New Jersey Lottery will send each winner a Form W2-G report showing the amount of lottery prize payments to be reported as income and the amounts of federal and state taxes withheld to be reported as credits on the winner’s federal and state tax returns.
Additional Information. Additional information about taxation on lottery winnings can be found on the Internal Revenue Service website and the New Jersey Lottery website. If you have any questions, please consult a professional tax advisor.
How Do You Pay Taxes on Lottery Prizes Won through theLotter NJ?
Lottery prizes up to $600. Lottery prizes of up to $600 will be paid to winners shortly after receipt of the prize money from the New Jersey Lottery. No taxes are due on lottery prizes under $600.
Lottery prizes over $600. To receive your winnings over $600, you will need to fill out a New Jersey Lottery Claim Form, which can be mailed or delivered to New Jersey Lottery Headquarters in person. It takes approximately three weeks to validate a claim and send a check to you for your winnings.
The New Jersey Lottery withholds taxes at source as detailed above.
theLotter NJ takes no commission on lottery prizes.