Q: What taxes are withheld if I win a lottery prize?
A: For residents and resident aliens, 31.25 percent in federal and state withholding taxes is deducted for every Lottery prize over $5,000.
Current federal tax law requires the Lottery to withhold 24 percent in federal income taxes, and current Minnesota state law requires the Lottery to withhold 7.25 percent in Minnesota state income taxes.
For non-resident aliens, current tax laws require that the Lottery withhold 30 percent in federal income taxes on all Lottery prizes and 7.25 percent in Minnesota state income taxes on Lottery prizes over $5,000.
Depending on your other income and deductions, amounts withheld by the Lottery on your winnings may or may not be sufficient to meet your total tax obligation.
It may be in your best interest to consult with a professional tax adviser to determine your tax situation to avoid any surprises at the end of the year.