Whether it’s the Powerball Jackpot or just a regular scratch-off ticket, here's how to report your winnings:
It’s my annual Taxes from A to Z series! This time, it’s Tax Cuts and Jobs Act style. If you’re wondering whether you can claim home office expenses or whether to deduct a capital loss under the new law, you won’t want to miss a single letter.The Powerball Jackpot is now $750 million, which makes it the fourth-largest U.S. lottery prize ever. Your odds of hitting the jackpot - and matching all six numbers - are about 1 in 292 million.
If you win, depending on the state, you can opt for a lump sum or an annuity. The annuity option would land you 30 average annual payments of $25 million, while the lump sum option is worth $465.5 million. That is, of course, before taxes: winnings are reportable for federal income tax purposes. Whether it’s the Powerball Jackpot or just a regular scratch-off ticket, your winnings may be reported to the Internal Revenue Service using a . A form W-2G is issued when gambling winnings other than those from bingo, slot machines, keno, and poker tournaments, are $600 or more and at least 300 times the amount of the wager. A form W-2G will also be issued if winnings are subject to withholding, including backup withholding and regular gambling withholding.
Your winnings are treated as ordinary income . So what determines your tax rate? If you take out your money in a lump sum, you'd pay at the rate determined by your tax bracket. Since most Powerball Jackpot winnings are more than the threshold for the top bracket , that means that those winnings are almost always taxed at top rates.
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