The New York State Lottery is required to report lottery winnings of $600 or more to the Internal Revenue Service.
The New York State Lottery withholds taxes before prize money is paid out. Federal and state withholding taxes are deducted for every lottery prize of $5,000 and more.
New York State Income Tax. State law requires the New York Lottery to withhold state income tax at the rate of 10.9% from any prize in of $5,000 and more. In addition, the New York Lottery withholds 3.876% for residents of New York City, and 1.82575% for residents of Yonkers.
Lottery prizes less than $600. Lottery prizes of less than $600 will be paid to winners shortly after receipt of the prize money from the New York State Lottery. In this case, no taxes are withheld from the prize.
Lottery prizes of $600 or more. All lottery prizes of $600 and up are collected by the winners personally at offices of the New York State Lottery.
The New York State Lottery withholds taxes on all lottery prizes over $5,000 as detailed above.
TheLotter New York takes no commission on lottery prizes.
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 York State 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.
For winners who are not U.S. citizens or legal residents, the IRS requires a 30 percent federal withholding on all applicable prize payments. Additionally, the Minnesota State Lottery is required to withhold 7.25 percent in state taxes on any prize over $5,000. While prize money is generally treated as income similar to wages, the winner’s final tax liability may vary depending on their individual tax status and residency.
