If I live in a state that taxes prizes, but bought my ticket in a state with no tax on prizes, do I still need to pay state tax?
Yes, you do. Think of lottery prizes as regular earned income from a job. Just because you may work in a different state, that doesn’t permit you to get away with not paying state income tax in your state of residence. The lottery works the same way.
Whether it’s income from a job or income from gambling, the state where the money is won will tax the prize first at their out-of-state tax rate (assuming the state taxes lottery winnings). If your state of residence has the same or lower tax rate, then you won’t owe anything else. But if your state has a higher rate, you will get a credit for what you paid in the other state, and pay the difference to your state.
If the other state has no tax, you just pay the entire tax bill to your state.
The net result is that you end up paying whichever tax rate is higher between your state of residence and the state where you purchased the ticket. Of course, the tax law is quite complex and it’s possible that some condition or arrangement exists between the two states and a good tax attorney and/or accountant could discover a tax-saving loophole. That’s why we always recommend that major prize winners do not make any major decisions before first hiring a good legal and financial team.
One other option to consider, depending on how much in taxes you’re looking to save: the residency requirements as they relate to prize claims, state taxes, and income reporting. Since you aren’t responsible for paying taxes until you claim the prize, perhaps there is time to establish residency in the state where you purchased the ticket before the prize claim period expires. However, that is something you would definitely need to explore with an attorney before taking any action to assess the feasibility. You would also need to decide if it would be worth the risk of that important little piece of paper not getting lost, damaged, or destroyed in the time you spend arranging everything.
Find out more about PowerBall in the frequently asked questions below. Visit the general FAQs page for more information about playing lotteries in South Africa.
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+ What time does the draw take place?
The winning PowerBall numbers are drawn at approximately 21:00 every Tuesday and Friday.
+ How much does it cost to play?
PowerBall costs R5 per board and PowerBall Plus costs an additional R2.50 to play.
+ When was the first PowerBall draw?
PowerBall was introduced in 2009 by then-lottery operator Gidani as another opportunity for players to win multi-million rand prizes. The first draw took place on 23rd October that year, with a R30 million jackpot on offer – which was won that very draw.
+ What is the biggest ever jackpot?
The record for the highest ever PowerBall jackpot was set in February 2019, when a man from Capetown matched all five main numbers and the PowerBall to win R232 million. He chose to remain anonymous; the only information revealed about the winner was that he was a man in his fifties who worked in a blue collar job.
If there’s anything else you need to know about USA Powerball, you may be able to find the answer below.
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+ What time do Powerball draws take place?
Powerball draws occur every Wednesday and Saturday at 22:59 Eastern Time. Because much of the USA observes Daylight Saving Time and South Africa doesn’t, the draw time according to South Africa local time changes at certain points in the year. The table below shows exactly when draws occur throughout the year:
|Start Date||End Date||Draw Time In USA||Draw Time In South Africa|
|Second Sunday in March||First Sunday in November||22:59 EDT||04:59 SAST|
|First Sunday in November||Second Sunday in March||22:59 EST||05:59 SAST|
+ When did Powerball start?
The first USA Powerball draw took place on 22 April 1992, with just 15 states taking part and players required to select five main numbers from 1 to 45, plus a Powerball number from a separate set of 1 to 45.
+ Is there a maximum jackpot?
No. The jackpot starts at $40 million and will keep growing until it is won.
+ What is the biggest prize ever won?
The largest lottery jackpot in history came when three ticket holders – from the states of California, Florida and Tennessee – shared a record $1.58 billion Powerball prize.
+ What is an annuity?
Jackpot winners in the USA have the choice between receiving the prize money in one big upfront payment, or spread out in regular ‘annuity’ payments over 29 years. The cash payout is always less than the annuity, as the interest generated over the 29 years of the annuity is also paid out to the player.
+ Can you win the jackpot from outside the USA?
Yes, third-party lottery betting and concierge websites allow you to participate in Powerball from outside the USA and in both cases you would be eligible to win all the prizes available, including the jackpot. For more information on how it works, visit the page.
+ Is USA Powerball the same as South Africa PowerBall?
No. Although the two games share a common name, they are completely unrelated to each other. The rules of playing, prizes, and odds of winning in both games are different.
Can non-US citizens play? What if a non-US citizen wins?
Yes, non-US citizens can legally play, and non-US citizens are eligible to win any prize offered in the game.
If a non-US citizen wins, they would claim their prize in the same manner that a US citizen would, but the taxes withheld would be different. For example, federal withholding for non-US citizens is a flat 30%. Also, individual states may have different tax structures for non-US citizens than they do for US citizens. Depending on which country the person is a legal resident of, there also may be tax treaties between the US and that other country which could be helpful in offsetting whatever the US tax liabilities are.
In short, non-US citizens can play and win Powerball. If a non-US citizen wins a large prize, they will be responsible for some amount of tax, which in the end will probably be an amount similar to what a US citizen would pay, but there are so many possible variations with international tax codes that you’ll need to consult with a local tax attorney if you need to know a precise amount of tax liability.
Are lottery prizes taxable?
Lottery winnings of $600.01 and over are subject to Federal Withholding tax. For
winnings of $600.01, up to and including $5,000, you will be issued a W-2G form
to report your winnings on your federal income tax form. For winnings of
$5,000.01 and over, your state’s Department of Revenue removes the 24 percent federal
withholding before you receive your winnings check (or, if it is
an annuity, from each winnings check). You then receive a W-2G form with each
check to submit with your 1040 form to show that the 24 percent federal
withholding already has been paid. In addition to federal tax, your state will
make additional withholdings for taxes, and most states will deduct other money that
you may owe to the state, such as back taxes, child support, loan payments, etc.
In addition, like the federal tax withholding, the state tax withholding at the time
of prize payout may not be the total state tax owed at the end of the year.
You must consult your state division of taxation for more information about the total
state tax requirements for lottery winners.
The state tax withholdings are as follows:
|Arizona||5% state withholding (Arizona residents), 6% state withholding (non-Arizona residents)|
|Arkansas||7% state withholding|
|California||No state tax on lottery prizes|
|Colorado||4% state withholding|
|Connecticut||6.99% state withholding|
|Delaware||No state tax on lottery prizes|
|Florida||No state tax on lottery prizes|
|Georgia||6% state withholding|
|Idaho||6.925% state withholding|
|Illinois||4.95% state withholding|
|Indiana||3.23% state withholding|
|Iowa||5% state withholding|
|Kansas||5% state withholding|
|Kentucky||5% state withholding|
|Louisiana||5% state withholding|
|Maine||5% state withholding|
|Maryland||8.95% state withholding (Maryland residents), 8% state withholding (non-Maryland residents)|
|Massachusetts||5% state withholding|
|Michigan||4.25% state withholding|
|Minnesota||7.25% state withholding|
|Mississippi||5% state withholding|
|Missouri||4% state withholding|
|Montana||6.9% state withholding|
|Nebraska||5% state withholding|
|New Hampshire||No state tax on lottery prizes|
|New Jersey||8% state withholding|
|New Mexico||6% state withholding|
|New York||8.82% state withholding, plus: 3.876% (NYC residents), 1.323% (Yonkers residents)|
|North Carolina||5.499% state withholding|
|North Dakota||2.9% state withholding|
|Ohio||4% state withholding|
|Oklahoma||4% state withholding|
|Oregon||8% state withholding|
|Pennsylvania||3.07% state withholding|
|Puerto Rico||No state tax on lottery prizes|
|Rhode Island||5.99% state withholding|
|South Carolina||7% state withholding|
|South Dakota||No state tax on lottery prizes|
|Tennessee||No state tax on lottery prizes|
|Texas||No state tax on lottery prizes|
|U.S. Virgin Islands||† Unknown State Tax Rate|
|Vermont||6% state withholding|
|Virginia||4% state withholding|
|Washington||No state tax on lottery prizes|
|Washington, D.C.||8.5% state withholding|
|West Virginia||6.5% state withholding|
|Wisconsin||7.65% state withholding|
|Wyoming||No state tax on lottery prizes|
† This state/jurisdiction has not responded to our requests for this information.