- GA Lottery won’t withhold taxes on prizes less than $5,000
- Prizes of $5,000 and up have 5.75% state and 24% federal taxes withheld
- Prizes of $2,500 have outstanding child support withheld
So… let’s say you’ve just won the Georgia Lottery. After the excitement wears off you may be wondering what comes next. There might be some complications when it comes to taxes, but never fear, Lotto Edge has all you need to know about taxes and lottery winnings in the state of Georgia.
Tax Implications of a $1,000 Lottery Win in Georgia
Let’s create a hypothetical scenario. Say you’ve won $1,000 through the Georgia Lottery. What are the tax implications of this?
The first thing to keep in mind is that all Georgia Lottery prizes are subject to any federal and state withholdings that may be applicable. Additionally, any Georgia Lottery winnings are subject to state and federal income taxes.
The Georgia Lottery Corporation, or the GLC, reports to both the Georgia Department of Revenue, as well as the IRS, the names of anyone who has won a prize of upwards of $600. So, if you were to win $1000 you would be included in this report.
For this amount the GLC would report your winning to the Georgia Department of Revenue and IRS and you would later pay when filing your taxes. That is the extent of the tax implications though. The Georgia Lottery itself will not withhold any taxes for a prize of $1,000.
Georgia State Taxes for Lottery Winners
What about the specifics of Georgia state taxes? As previously stated, all Georgia Lottery prizes are subject to federal and state taxes and withholdings that are applicable to the prize they have won. But let’s get into some numbers that apply to prizes won that are $5,000 or a number exceeding that. At the time the prize is claimed the Georgia state income tax of 5.75% and the federal income tax of 24% will be withheld from the winnings.
Let’s circle back to our initial scenario. If you’ve won a prize of $1,000 the Georgia Lottery does not withhold any taxes, but you will be included in the GLC’s report to the IRS and the Georgia Department of Revenue and must pay when you file your taxes. This goes for anyone who has won a prize larger than $600. As for a prize larger than $5,000 that is when tax deductions will be implemented.
What Happens When You Win the Lottery in Georgia?
So, what happens if you win the lottery in Georgia? To review, if you have won a prize above $600 there will be no tax withholdings implemented, this winning will be reported to the IRS as well as the Georgia Department of Revenue, and you will be required to pay when filing taxes. The Georgia state income tax is 5.75% and the federal income tax is 24%, and these will be withheld from any winnings of $5,000 or more.
There are some additional things the Georgia Lottery Commission is required to check for. If the prize is $2,500 and above then any outstanding child support payments will be deducted from the amount that an individual has won. As for prizes that are $5,000 and above the GLC is required to check for and deduct student loans and state taxes. This is all net of wager and ticket cost.