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Tax/How much Tax on Prize under $5,000?

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  I know everybody always says search google to find the answer to questions.  Well I did that and still got no answer.  All the lottery sites say the state withholds fed/state taxes on prizes greater than 5 thousand, and  they expect you to pay the taxes on prizes of less than that, but they never tell you how much you have to pay on prizes under 5 thousand.

Do I still have to pay a bunch of federal taxes  or just state taxes?

Would I still have to pay about the same percentage of tax as a big prize winner (like 25 to 30 percent altogether)?  I'm in Ohio.        Thanks 

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Just to be safe I would pay 10% to the state and 20% to the federal government.  Smaller prizes don't generally increase your tax bracket by that much larger prizes generaly do.  That's why you have to pay on larger prizes immediately.  By tax bracket I mean how much tax you owe on the money that you currently make before other winnings.  So so answer your question it depends on the tax bracket that you in and the tax bracket that the smaller prize may put you in.  Consult your tax advisor for a more accurate withholding amount.

 

One other thing you can do is to add the value of your prize to your last years taxable income.  Look up what the tax would be on that total amount.  Is it much different?  If so then pay, out of your winnings, the difference.

 

Bradly_60's avatar - disney37

Yeah prizes under $5000 get taxed when it comes to doing your taxes.  The easiest way is to save some of the money. 

Save the amount your state taxes out of each paycheck.  Here in Michigan that would be 3.9%.  So 3.9% of your winnings will be taxed by the state.

For the federal you have to look at your marginal tax bracket.  In what bracket will these winnings put you in?  The 15% or maybe the 20% (is there a 20% bracket?) Well anyway just look at a tax table and you will find out what your marginal tax rate is.

Brad

masslottery's avatar - dragon eye.jpg

federal is 25% and state is all depends what state you live in/here its 10% on state correct me if im wrong on the federal

masslottery's avatar - dragon eye.jpg

federal is 25% and state is all depends what state you live in/here its 10% on state correct me if im wrong on the federal

i know this much if you hit the mass cash here the prize is $100.000 after state taxes you only get about $75.000 our less

Badger's avatar - adu50016 NorthAmericanBadger.jpg

  I know everybody always says search google to find the answer to questions.  Well I did that and still got no answer.  All the lottery sites say the state withholds fed/state taxes on prizes greater than 5 thousand, and  they expect you to pay the taxes on prizes of less than that, but they never tell you how much you have to pay on prizes under 5 thousand.

Do I still have to pay a bunch of federal taxes  or just state taxes?

Would I still have to pay about the same percentage of tax as a big prize winner (like 25 to 30 percent altogether)?  I'm in Ohio.        Thanks 

Here in WI if you have a winning lottery ticket for more than $599 (i.e. $600 or greater) you have to take it to the lottery office to redeem it. A retailer can not redeem it. Once there, you have to fill out the paperwork. The state takes out their 7%, and 30% for the Federal govt. However, it could cost you more than that, since the amount of  your winnings iis also calculated as "earned income" for your end of the year Fed 1040 and the State Form #1. That means whatever you earned from your job during the year, the winnings must be added to that when calculating your taxes.

It's not pretty.

RJOh's avatar - chipmunk

For most players, lottery winnings are taxed like regular income.  In Ohio if you win $600 or more the state will issue a W-G form to be filed with your Federal and States taxes same as a W-2 or 1099-R.

dnroth's avatar - pryd

  I know everybody always says search google to find the answer to questions.  Well I did that and still got no answer.  All the lottery sites say the state withholds fed/state taxes on prizes greater than 5 thousand, and  they expect you to pay the taxes on prizes of less than that, but they never tell you how much you have to pay on prizes under 5 thousand.

Do I still have to pay a bunch of federal taxes  or just state taxes?

Would I still have to pay about the same percentage of tax as a big prize winner (like 25 to 30 percent altogether)?  I'm in Ohio.        Thanks 

Here in WI if you have a winning lottery ticket for more than $599 (i.e. $600 or greater) you have to take it to the lottery office to redeem it. A retailer can not redeem it. Once there, you have to fill out the paperwork. The state takes out their 7%, and 30% for the Federal govt. However, it could cost you more than that, since the amount of  your winnings iis also calculated as "earned income" for your end of the year Fed 1040 and the State Form #1. That means whatever you earned from your job during the year, the winnings must be added to that when calculating your taxes.

It's not pretty.

Badger,

 I thought the Federal 30% was a withholding, like having taxes withheld from your weekly paycheck.  Shouldn't such a withholding count against your taxes at year-end?

 Then again, I may be mistaken.  That's what happens when you can't hold even the IRS-appointed tax helpers accountable for the advice they give.

 --D.N.

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