If I live in a state that taxes prizes, but bought my ticket in a state with no tax on prizes, do I still need to pay state tax?
Yes, you do. Think of lottery prizes as regular earned income from a job. Just because you may work in a different state, that doesn’t permit you to get away with not paying state income tax in your state of residence. The lottery works the same way.
Whether it’s income from a job or income from gambling, the state where the money is won will tax the prize first at their out-of-state tax rate (assuming the state taxes lottery winnings). If your state of residence has the same or lower tax rate, then you won’t owe anything else. But if your state has a higher rate, you will get a credit for what you paid in the other state, and pay the difference to your state.
If the other state has no tax, you just pay the entire tax bill to your state.
The net result is that you end up paying whichever tax rate is higher between your state of residence and the state where you purchased the ticket. Of course, the tax law is quite complex and it’s possible that some condition or arrangement exists between the two states and a good tax attorney and/or accountant could discover a tax-saving loophole. That’s why we always recommend that major prize winners do not make any major decisions before first hiring a good legal and financial team.
One other option to consider, depending on how much in taxes you’re looking to save: the residency requirements as they relate to prize claims, state taxes, and income reporting. Since you aren’t responsible for paying taxes until you claim the prize, perhaps there is time to establish residency in the state where you purchased the ticket before the prize claim period expires. However, that is something you would definitely need to explore with an attorney before taking any action to assess the feasibility. You would also need to decide if it would be worth the risk of that important little piece of paper not getting lost, damaged, or destroyed in the time you spend arranging everything.
Can non-US citizens play? What if a non-US citizen wins?
Yes, non-US citizens can legally play, and non-US citizens are eligible to win any prize offered in the game.
If a non-US citizen wins, they would claim their prize in the same manner that a US citizen would, but the taxes withheld would be different. For example, federal withholding for non-US citizens is a flat 30%. Also, individual states may have different tax structures for non-US citizens than they do for US citizens. Depending on which country the person is a legal resident of, there also may be tax treaties between the US and that other country which could be helpful in offsetting whatever the US tax liabilities are.
In short, non-US citizens can play and win Powerball. If a non-US citizen wins a large prize, they will be responsible for some amount of tax, which in the end will probably be an amount similar to what a US citizen would pay, but there are so many possible variations with international tax codes that you’ll need to consult with a local tax attorney if you need to know a precise amount of tax liability.
Power Play is an add-on feature that allows players to multiply their non-jackpot prizes, for just $1 more per play! With Power Play, players can win $2 million for matching the five white balls or multiply his/her other non-jackpot prizes two to five times when the advertised jackpot is over $150 million, and up to 10 times when the advertised jackpot is $150 million or less. A player must choose the Power Play option on his/her POWERBALL playslip or tell the retailer that he/she wishes to purchase a Power Play ticket. The multiplier number will be selected just before the draw.
($1) POWER PLAY
On Jackpots upto $150 million
|5 of 5 + PB||*$20,000,000||1:292,201,338||—||—||—||—||—|
|5 of 5||$1,000,000||1:11,688,053.52||$2,000,000||$2,000,000||$2,000,000||$2,000,000||$2,000,000|
|4 of 5 + PB||$50,000||1:913,129.18||$100,000||$150,000||$200,000||$250,000||$500,000|
|4 of 5||$100||1:36,525.17||$200||$300||$400||$500||$1,000|
|3 of 5 + PB||$100||1:14,494.11||$200||$300||$400||$500||$1,000|
|3 of 5||$7||1:579.76||$14||$21||$28||$35||$70|
|2 of 5 + PB||$7||1:701.33||$14||$21||$28||$35||$70|
|1 of 5 + PB||$4||1:91.98||$8||$12||$16||$20||$40|
*Jackpots start at $20 million and roll over until won. The jackpot prize will be shared among jackpot winners in all POWERBALL states. All non-jackpot prizes are set payouts. If funds are insufficient to pay set prizes, non-jackpot prizes maybe paid on a pari-mutuel basis and could be lower than the amount shown.
How to Win
Prior to the official POWERBALL drawing conducted by MUSL, a Power Play multiplier number (between 2 and 5; 10 is included when the advertised jackpot is $150 million or less) is selected and will be displayed during the draw, in which five out of 69 numbers (white balls) and a Powerball number between 1 and 26 (red ball) will be drawn at random. There are nine ways to win POWERBALL prizes by matching the winning numbers drawn in the official drawing for the date played. Match all five numbers plus the Powerball to win the jackpot or match any of the non-jackpot-winning combinations to win other great cash prizes!
All POWERBALL prizes are set payouts, except the jackpot. The jackpot prize will be shared among winners in all POWERBALL states. The jackpot will be paid in 30 annual payments or a one-time cash payment of a reduced amount. If there is no jackpot winner, the money in the jackpot pool rolls over to the next POWERBALL drawing.
All POWERBALL prizes must be claimed in the state where the ticket was purchased. POWERBALL prizes must be claimed within 180 days after the winning drawing date. Federal income taxes will be withheld from POWERBALL prizes as required by the Internal Revenue Code at the time payments are made. Any additional federal, state and/or local taxes shall be the responsibility of the winner. Prizes of up to $1 million may be claimed at a Florida Lottery district office. Prizes of more than $1 million must be claimed at Lottery Headquarters in Tallahassee. Read more about claiming Lottery prizes.