Winners of the Kansas Lottery share their good fortune not just with family and friends but also with the Internal Revenue Service and the Kansas Department of Revenue. The winnings are fully taxable at both the federal and state levels. Taxation is applicable to all prizes in all games, including multistate games such as Mega Millions and Powerball, when you buy the tickets through the Kansas Lottery.
If you have any gambling winnings, including Kansas Lottery winnings, you must file your federal income taxes using Form 1040; you cannot use the shorter Form 1040A or the abbreviated Form 1040EZ. Report your Kansas Lottery winnings the line designated for “Other income.” If you have taxable gambling winnings in a year, you can take a tax deduction for any gambling losses in that same year. To deduct gambling losses, itemize your deductions using Schedule A. Include the total amount of your losses on the line for “Other miscellaneous deductions.” You can claim gambling losses only up to the amount of your winnings. For example, if you won $1,000 in the Kansas Lottery but spent $1,500 on lottery tickets, you can deduct only $1,000 worth of the losing tickets.
Kansas’ state income tax form uses your federal adjusted gross income as a starting point for figuring out how much you owe in Kansas taxes. The federal adjusted gross income will include your Kansas Lottery winnings, which are subject to state income tax. Kansas allows you to take the same itemized deductions on your state taxes as on your federal taxes, so your gambling losses will be deductible.
If you win a prize of more than $5,000, the Kansas Lottery automatically withholds 25 percent for federal income taxes and 5 percent for Kansas income taxes. For prizes of $5,000 or less, the lottery does not withhold taxes, but you are still responsible for reporting the winnings as income. If you win a prize big enough to trigger withholding, the actual taxes you end up owing on your winnings may be more or less than the amounts withheld, depending on your tax bracket.
Claim prizes of less than $600 at any Kansas Lottery retailer or at either of the lottery’s two offices, in Topeka and Great Bend. For prizes of $600 or more, fill out a claim form and submit it to one of the lottery offices, either in person or by mail. Winners who submit a claim form may receive a copy of federal Form W-2G, “Certain Gambling Winnings,” which details how much was won and how much, if any, was withheld for taxes. Smaller prizes will not produce a W-2G.
- Kansas Lottery: Frequently Asked Questions
- Kansas Department of Revenue; Individual Income and Food Sales Tax Instructions; 2010
- Internal Revenue Service: Publication 525: Other Income; 2010
- Internal Revenue Service: Schedule A
- Internal Revenue Service: Form W-2G
- IRS. "Instructions for Forms W-2G and 5754 (2020)." Accessed March 27, 2020.
- IRS. "IRS Provides Tax Inflation Adjustments for Tax Year 2020." Accessed March 27, 2020.
- Tax Foundation. "Taxes in New York." Accessed March 27, 2020.
- The Tax Foundation. "State Individual Income Tax Rates and Brackets for 2020." Accessed March 27, 2020.
- Oregon Secretary of State. "Government Finance: Taxes." Accessed March 27, 2020.
- MoneyManagementInternational.org. "How Much Does Winning the Lottery Cost You?" Accessed March 27, 2020.
- IRS. "Topic No. 419 Gambling Income and Losses." Accessed March 27, 2020.
- IRS. "Topic No. 503 Deductible Taxes." Accessed March 27, 2020.
Cam Merritt is a writer and editor specializing in business, personal finance and home design. He has contributed to USA Today, The Des Moines Register and Better Homes and Gardens"publications. Merritt has a journalism degree from Drake University and is pursuing an MBA from the University of Iowa.