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U.S. Citizenship and Residency

Super-man's avatar - avatarsupes

Greetings and happy new year to all Lottery Post members and administrators! I've been lurking around the site ever since I arrived here in Pennsylvania last year and started playing Powerball; and I must say that I've learned a lot from everyone's inputs and discussions.

Having said that, I've read from several lottery FAQs that if you're not a US citizen and you win the jackpot (among other major prizes), the federal withholding tax is a flat 30%. As we speak, my papers to become a citizen are in the works; and since I'm a resident "citizen-in-waiting" alien, what if I win the next Powerball jackpot (dream on!) before my citizenship becomes final? Are they still going to tax me flat 30% instead of the standard 25? It's a good thing that Pennsylvania doesn't tax lottery prizes.

Please enlighten me on this one. Thank you very much LP!Wink

four4me's avatar - gate1

you have 180 days to claim powerball tickets. So one way or another the feds will collect.

KY Floyd's avatar - sunflowers avatar.jpg

I highly doubt there's  special rule for non-citizens who are  expecting to become citizens. Suppose your citizenship isn't finalized for some reason, or you just decide to leave with  the money? Either way, it isn't really important, assuming you plan to stay here and pay your taxes.

Citizen or not, as a US resident your actual US tax obligation if you win a jackpot is likely to be  pretty close to 35%.  If you have to pay taxes to the country of which you're currently a citizen you may receive a credit against US income taxes. If you pay less than 35% to another country the US will still collect the balance of 35% (subject to the usual deductions, and the relatively modest amount that's taxed at lower rates). If you pay more than 35% to another country you'll get a fat refund from the IRS.

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 In California, BOTH citizens and permanent residents pay 25% tax, as long as you provide your SSN. If you don't provide the SSN, you pay 30%. People with no Green Card pay 30% no matter what.

 I am a permanent resident and if I win, I would provide my SSN. 5% is a huge chunk if you win a multi-million-dollar jackpot. And Lottery Commission will certainly not disclose my SSN.

 Even better, hundreds of Koreans living in LA county share the same first and last name with me.

Todd's avatar - Cylon 200.jpg
In response to Super-man

I think you'd still end up paying the flat rate, plus state taxes (if any in the state you purchase the ticket in).

You would naturally check with a good accountant before claiming, of course!

Also, don't get wrapped up in the talk about owing 35%, 36%, or even 38%.  Not everyone pays that much.  The ones you hear about that hire accounting teams are much smarter than that, and don't pay nearly that much.

You can find a good description of a bunch of tax issues by going to www.usamega.com and clicking on Jackpot Analysis under the Powerball heading.  Among the useful information on that page, definitely check out the notes at the bottom.

That page was recently updated to add Florida, and now allows people to view and analyze PAST jackpots.  (Click Previous Results, then click the jackpot of the drawing date you want to view.)

Good luck!

Super-man's avatar - avatarsupes

Oh I see...thanks to all of you guys who replied. I would say that I am now enlightened. Yes Todd, the USAMega website is indeed a very informative place for lottery players. Thanks for the referral. I sure hope when the BIG day arrives, my green card has already turned into US citizenship.

Thanks again guys!Big Grin 

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