Tax Requirements for Lottery Prizes
The Colorado State Lottery is required to report lottery winnings over $600 to the Internal Revenue Service.
The Colorado State Lottery withholds taxes before prize money is paid out. Federal and state withholding taxes are deducted for every lottery prize over $5,000.
For Colorado residents: Current federal tax law requires the Lottery to withhold 24 percent in federal income taxes, and current Colorado state law requires the Lottery to withhold 4 percent in Colorado state income taxes.
If you are not a US citizen: Current tax laws require that the Lottery withhold 30 percent in federal income taxes on all Lottery prizes and 4 percent in Colorado state income taxes on Lottery prizes over $5,000.
Please note: Depending on your income, deductions, exemptions, and filing status, amounts withheld by the Colorado State Lottery on your winnings may or may not be sufficient to meet one’s total tax obligation.
Tax Returns. According to the Internal Revenue Service, winnings from lotteries and raffles are considered gambling winnings. After the end of the year, the Colorado State Lottery will send each winner a Form W2-G report showing the amount of lottery prize payments to be reported as income and the amounts of federal and state taxes withheld to be reported as credits on the winner’s federal and state tax returns.
Additional information about taxation on lottery winnings can be found on the Colorado Lottery website and the the Internal Revenue Service website. If you have any questions, please consult a professional tax adviser.
How Do You Pay Taxes on Lottery Prizes Won through theLotter Colorado?
Lottery prizes up to $600. Lottery prizes of up to $599 will be paid to winners shortly after receipt of the prize money from the Colorado State Lottery. In this case, no taxes are withheld from the prize.
Lottery prizes over $600. All lottery prizes of $600 and up can be collected by the winners in person by appointment at the Colorado Lottery Claim Center. If your prize is below $5,000, you can process your claim online by filling out a prize claim form that can be found on the Colorado Lottery website or by using the link that will be provided to you by the Colorado Lottery when you win.
If you have outstanding payments due to the Department of Human Services, Department of Justice or Department of Personnel and Administration, these will be deducted from your prize valued at $600 or more.
The Colorado State Lottery withholds taxes on all lottery prizes over $5,000 as detailed above.
theLotter Colorado takes no commission on lottery prizes.