Congratulations! You took a chance and bought a winning lottery ticket. Now, you need to cash it. Winning lottery tickets may only be redeemed in the state where the ticket was purchased. Prizes up to a certain amount may be redeemed at any store or location that sells lottery tickets. However, prizes over a certain amount must be redeemed with the state lottery office.
Winnings More Than $600
If your prize is over $600, the prize amount is reported to the IRS and you will have to pay taxes on the amount. As of 2020, the federal tax withheld on lottery winnings is 24%, and state taxes vary across different states, ranging from zero to 13%. The state lottery commission also sends a 1099 to you at the end of the year listing your prize over $600. Prizes that are less than $600 are not reported to the IRS, but this does not mean that they are not taxable.
If you've won an enormous prize, such as the Powerball jackpot, you'll also want to decide whether you want to receive your money as an immediate, reduced lump sum or as an annuity spread out over three decades. You may not want to dawdle on that decision, because while some states give you 180 days after winning to claim your prize, others may give only 60 days if you want your payout as a lump sum.
Read More: When Are Lottery Winnings Taxable?
If you've won a large amount of money, you may want to assemble a trustworthy team of attorneys and financial experts – at the least, a certified public accountant (CPA) to help you claim and control your winnings.
Winnings Less Than $600
When you win less than $600, you can take your winning ticket to an authorized lottery retailer. It doesn't have to be redeemed at the same place you purchased the ticket, however, it does have to be redeemed in the same state.
You can redeem a winning ticket from any type of lottery game to an authorized retailer when your prize is less than $600. Authorized retailers include stores and other establishments that sell lottery tickets in your state such as, convenience or grocery stores.
Contact the State Lottery Office
You can also take your lottery ticket to a state lottery office to redeem it. Although the lottery office cashes out winning tickets for any prize amount, many players take tickets showing a prize of over $600 to the lottery office as some authorized lottery retailers may not have enough cash on hand to pay out large winnings.
To redeem with the office, visit the website for the winning ticket’s state lottery to find claim office locations. Don't forget, you must sign the back of your ticket in order to make sure you're the only one who can claim it.
Mail in a Claim Form
If you do not wish to visit the lottery office in person, you may mail your winning ticket, along with a claim form, to the lottery office for the state where the ticket was purchased.
If you live in a state other than the state you purchased the winning ticket, you may also use the mail-in method to redeem your prize easily. Locate claim forms on the state lottery website for the state where the winning ticket was purchased for further guidance.
Read More: How to Invest Lottery Money
- Oregon Lottery: Claim Prizes/Claim Form
- CBS News: Won the Lottery? 6 Things You Should do Before You Claim Your Win
- California Lottery: Claiming Prizes
- IRS: Instructions for Forms W-2G and 5754 (2018)
- Tax Foundation: Lottery Tax Rates Vary Greatly by State
- CNBC: If you hit the $237 million Powerball jackpot, this is your tax bill
- Tax Foundation: What Percentage of Lottery Winnings Would Be Withheld in Your State?
- Investopedia: The Lottery: Is It Ever Worth Playing?