If you're fortunate enough to win the lottery one day, that luck will not extend to the tax man. That's because Uncle Sam will eventually come knocking and expect his cut. That means you'll have to file an income tax return and include your lottery winnings.
You're a Winner
Gambling winnings are considered income by the IRS. This isn't just winnings from a casino, but also includes winnings from the lottery, or lotto, and scratch-off tickets, among other things. Typically, the payer of the lottery winnings will send the winner IRS Form W-2G, Certain Gambling Winnings, detailing the total amount of the lottery payout and any tax withheld.
Now Pay Up
Since the IRS considers lottery winnings income, the recipient is required to file a federal tax return and pay the required taxes on the income. He must also file a state income tax return on the earnings, unless his state does not have state income taxes or excludes state lottery winnings from them, as California and Pennsylvania do, according to Forbes.
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