New tax code impacts lottery prizes

January 29, 2018 Posted by NC Lottery at 11:18 AM

The new tax code will impact lottery players and prizes, so here’s what you need to know.

When you claim a prize of over $5,000, we automatically take out the minimum state and federal taxes before we give you your check.

Starting Monday, January 29, the amount is changing to reflect the new tax code. This means federal withholdings will be 24% instead of 25%. The state rate will stay the same at 5.499%

As always, we recommend that you check with a tax preparer when you win a prize.

28 COMMENTS

10/02/2024 06:16 - Kim W.

Are all winnings on the online lottery at the end of the year and totaled and you then pay taxes or is it per winnings over $600? How does this work at the end of the year?NC Lottery
Hi, Kim! You can view any W2G forms needed for wins over $600 from the My Account page under Tax Reported Prizes. Wins under $600, even if you have multiple wins that add up to be over $600, do not generate these tax forms. Please keep in mind that lottery winnings are considered taxable income and should still be reported when completing your taxes, but you will just not receive tax forms through Online Play for wins under $600.

9/06/2023 08:15 - Arizona T.

If I have a $600 ticket will I get textsNC Lottery
Hey there, Arizona! If you win more than $600, you'll receive a 1099 Tax Form at the end of the year.

8/13/2023 12:27 - lauren m.

If my father and I won a $1,000 scratch off does the IRS get notified when we both claim the prize?NC Lottery
Hi, Lauren! Yes - all wins over $600 are subject to tax withholding - while the prize split between your father and you would be less than the $600, we would withhold taxes from the prize prior to awarding so taxes (4.75% for NC state tax) would be withheld prior to splitting the claim. Lottery winnings are taxable income, and anyone that wins over $600 in a year will receive a 1099 form at the end of the year. Hope this helps to answer your question!

3/24/2022 12:26 - Ed R.

I recently won $2000 on a scratch off. How much will I be taxed. And will it be federal and state taxes?NC Lottery
Hi there, Ed! Congratulations on the win! The federal withholding begins with all prizes of more than $5,000 and the state withholding begins with all prizes of $600 or more. So your $2,000 win would just be taxed the state rate of 5.25%. Hope this helps!

8/19/2020 10:08 - Preston B.

so will you still need write down lottery winnings as income if you win over 5000$? If so wouldn't that be being taxed twice? NC Lottery
Hey Preston, Winners are not double-taxed on lottery winnings. By law, we are required to withhold 24% federal and 5.25% state taxes on prizes at the time a winner claims. Depending on each individual's unique financial situation, a person's tax obligation could be more or less than what was withheld. Think of lottery winnings like income - taxes are withheld at each paycheck, but at the end of the year, depending on how much you paid, you might owe some or you might get some back. That's why we encourage winners to consult with a tax professional before claiming.

8/09/2020 08:22 - Cory k.

If I have a $1,000 winning ticket and a $5,000 winning ticket when I claim my prizes, does this mean I pay federal because I have exceeded $5,000? Or does the federal tax only apply to a single ticket? NC Lottery
Hi Cory, That's a great question! In this scenario, you would pay only state taxes on each individual prize, since the tickets are separate from one another.

2/02/2020 06:27 - Ryan E.

Since 5000 or less is only taxed at state level for NCEL, am I supposed to pay the federal on it on my own next tax return? NC Lottery
Hi Ryan, Lottery winners are considered income, so what you may or may not owe at tax time will depend on your total income for the year. While we aren't able to offer tax advice, we do recommend that you consult with a tax professional if you have further questions about how claiming lottery winnings might affect your taxes.

10/08/2019 06:03 - Anthony K.

If you have student loans and you win on puck 4 will they take your winnings if your still a college student NC Lottery
Hi there Anthony, If a person owes a debt to a state agency or a local government agency, then that debt can be collected out of lottery prize as the winner is paid. It reduces the amount of prize money you get, but at the same time you get a debt that may have been worrying you paid off. This only applies to debts that are considered "delinquent", meaning that the person who owes the debt is behind on payments. As long as you keep up-to-date with payments for any debts that you owe, they will not factor in to your lottery winnings if you were to win. Here's more info on how the program works: http://www.ncsetoff.org.

4/16/2019 05:39 - Tiffany I.

If you win 5000 what is the tax on it? It say over 5000 is taxed at 24% so is that 5000 and up or starting at 5001 and up?NC Lottery
Hi Tiffany, As of now, a prize of exactly $5,000 would be taxed at 5.499%. Wins of $5,001 and up are subject to state tax of 5.499% and federal tax of 24%. Of course, that amount will vary as tax rates change.

1/11/2019 12:20 - Lisa J.

If you win a non-cash prize, for example the Home Depot gift cards, do you have to pay taxes immediately to receive your prize?NC Lottery
Hi Lisa, Typically, the lottery covers the taxes for promotional prizes. However, since we only cover minimum state and federal taxes, we still recommend winners consult with a tax professional so there are no surprises come tax time.

10/05/2018 12:05 - Edward M.

Will the lottery take more than the 24% Federal Tax if requested by the prize winner? NC Lottery
Hi Edward, The lottery will only withhold the minimum state and federal taxes at the time a winner claims their prize. However, we do recommend that winners meet with a tax professional immediately after claiming their prize to ensure that there are no surprises come tax time.

8/18/2018 12:50 - Andrew C.

So with this new tax update how will that change the annual payout for the lucky for life top prize? NC Lottery
The game itself hasn't changed. All prizes, including the top prize of $1,000 A Day For Life, are taxed with the new tax rate of 24%.

6/18/2018 08:05 - Carolyn J.

Hi. I won a prize of 10,000 on a scratch off. When I turn my ticket in i will be taxed. Are you takesd again on the 10,000 at the end of the year when I goal taxes?NC Lottery
Hi Carolyn, Congratulations on your win! Since we don't know what tax brackets our winners are in, the lottery only withholds minimum state and federal taxes at the time you claim. We recommend that you talk to a tax professional before or immediately after claiming to ensure that there are no surprises come tax time.

6/10/2018 09:12 - SONJA P.

I keep losing this app wts can not get back please let me know how to get back.NC Lottery
Hey Sonja, If you accidentally removed the app from your phone, you can re-download it here: https://www.nclottery.com/MobileApp. Let us know if there is anything further we can do to help you!

5/06/2018 02:06 - Chenoa F.

I would like to know how many players that purchase online tickets for games like the Cash 5, Powerball, etc, actually win? I know online players supposedly have the same chance of winning but every time a big winner is featured on the news they have purchased the ticket at a store. That doesn't seem like the odds are the same. NC Lottery
Good morning, Chenoa. The odds for winning a draw game are the same however you buy your ticket. Since most people still buy at traditional retail locations, you'll see more stories of winners who bought their tickets there. As that changes, you'll see more wins through online play. Someone won $40,000 in Friday's Mega Millions game with a ticket purchased with Online Play. And check out this story about an Online Play ticket that produced a $25,000 A Year For Life prize for a North Carolina player. http://bit.ly/2HX0V3d Good luck to you, however you buy your ticket.

4/09/2018 12:22 - Lynne F.

In January, Ms. Cynthia asked why the Pick 3 isn't available to play online and the response that was provided was that it wasn't a game that was offered online with no actual reason why. So why isn't it offered online? The Cash 5, Powerball, Mega Millions, Lucky for Life, etc. are all offered online. It makes no sense to me why both Pick 3 and 4 have been excluded from online purchases. Also, it was mentioned that the decision-making team reads this blog. Is this really true? Have they actually read this blog and taken it into consideration to implement these games for online play purchases anytime soon? I would like to be able to purchase Pick 3 and 4 online just like the other games. Any info would be greatly appreciated. NC Lottery
Thanks for feedback, Lynne. Moving carefully with our online games. Pick 3 and Pick 4 offer various ways to play and the ability to cancel a ticket. We do share your feedback with folks who design our games and our website.

2/17/2018 01:01 - Ms Xzavier C.

Thank you appreciate the updated tax law as it pertains to NCEL winnings it now seems to make sense

2/07/2018 04:40 - Toronda J.

Hello It’s super frustrating to try checking a ticket to see if it’s a winner or not because the scanner never works around this time of the morning. It never works starting around 1am-6am. It’s been like this since the new check to see if it’s a winner scanner was added. Why is this? NC Lottery
Good morning, Toronda. Each night, the lottery system shuts down from 2 a.m. to 5 p.m. No one can scan tickets or buy tickets during that three-hour window each day. Hope you find scanning a convenience for you at all other times of the day.

2/06/2018 06:38 - jackie w.

This is for Lisa P. I agree with you wholeheartedly, no one is winning here in Roxboro either. My husband and I buy scratch offs everyday and the only thing we can get is cost of ticket back. Then when they put a win all number on ticket and all that is under it is $2, wow. I think they should do one game where if you have a big winner that s what it says when you scratch it off, the rest would stay the same. Good luck to you and everyone!

2/05/2018 05:00 - annie s.

good advice thank you

1/31/2018 07:20 - lisa p.

That information wont impact too many people then. Scratchoffs arent paying anything for most players. I dont think they need that tidbit of tax news. Worst drought for tickets Ive ever seen. Everybody I know agrees. NOBODY IS WINNING ANYTHING IN THIS AREA!

1/30/2018 03:36 - Yohon W.

why since the new lottery page is it always crashing,or having problems and you are'nt able to finish your purchase? NC Lottery
Hi, Yohon. We aren't experiencing widespread issues. Try calling out Customer Service team. They should be able to help figure out what is going on.

1/30/2018 07:07 - m. earl b.

So now u don't take out taxes on a win of 1k. I know when I won 1k I had taxes taken and had to file with my income after filing out the w2 form. Haven't had a big win in a l-------ong time. NC Lottery
Lottery prizes are considered additional income to Uncle Sam so they will always be subject to state and federal tax laws. The lottery withholds minimum state taxes on wins over $600. And the lottery withholds minimum state and federal taxes on wins over $5,000.

1/29/2018 11:15 - Javien B.

Why are the 2nd chance drawing televised? What is the protocol and exactly who does the physical drawing? Is it automated? I only ask because I entered the drawing since 2014 and never anything! Just wandered on how the drawings are played out? NC Lottery
Hi there, Javien. Thanks for reaching out and asking great questions! Promotional and second-chance drawings are held using a random number generator according to specific security procedures. To ensure fairness to all players, all lottery drawings are done with an auditor present and all the lottery’s security practices are independently reviewed on a regular basis. The more entries you make into a drawing, the more chances you have to win. But having even just one entry in a drawing gives you a chance to win. Sometimes there are over 1 million entries into drawings. You are welcome to come out and watch second-chance drawings, just like you can watch Pick 3, Pick 4, and Cash 5 drawings.

1/29/2018 08:19 - Cynthia W.

Why don't you have pick 3 drawings in the online purchase? NC Lottery
Hi there, Cynthia.It just isn't one of the games we offer online. However, the people who make those decisions read this blog :)

1/29/2018 07:21 - Alvin H.

Hi, can you please expand Multi-Draw for Pick-3 and Pick-4 from 7 consecutive drawings to at least 14? This would be a big help for players who plays exact numbers every week. Thanks! NC Lottery
Hi, Alvin. Thanks for the suggestions! The people who make those decisions read this blog :)

1/29/2018 07:07 - Alvin H.

I was just thinking, you guys have made a lot of changes. When will you change the Pick-3 and Pick-4 draw machines? Also will you please add a Cash-5 midday draw. NC Lottery
Hi there, Alvin. Thanks for reaching out with your suggestions. The people who make those decisions read this blog. At this time, there is no plan to add another draw to Cash 5. It serves as N.C.'s jackpot game so players who do not want to play the multi-state games have another option.

1/29/2018 02:32 - Mike S.

Hey NCEL, how about updating the outdated Keno Events on the Keno page? If you have more scheduled, update it, if not remove old information. NC Lottery
Hey there, Mike. Thanks for reaching out and letting us know. We've alerted our web team.

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New tax code impacts lottery prizes

January 29, 2018 Posted by NC Lottery at 11:18 AM

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