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:
citizens, the Federal Government requires the Texas Lottery Commission to report the following lottery winnings to the IRS:
