Buying the lottery is the favorite pastime of many people who dream of becoming millionaires overnight, investing little money and effort. If you are one of those people, before you buy the next lottery ticket you must know some regulations and obligations that you as a consumer must follow when playing the lotus so that you do not have problems with the Internal Revenue Service (IRS for its initials) in English), if you win the lottery.
1. If you are undocumented you can play the lottery and get the prize
You don’t need another person with citizenship to change the award for you, since you don’t need to have a social security number to get the money. The Government only stipulates that you have an obligation to pay federal and state taxes. On the other hand, you may need to present evidence that you reside in the state where you received the award in order to be eligible for the award.
By winning you could receive the W-2G form
The IRS may send you Form W-2G to report your earnings and pay the applicable taxes. With the W-2G form you would be reporting your earnings and paying federal taxes if you earned more than $ 600.
3. You have to declare the income you get from playing
If you win the lottery prize you must report all winnings on the tax return (Form 1040 or Form W-2G). The IRS indicates that you will have to report all the money that you obtain when playing: bingo, raffles, tournaments, scratch games, horse races, lottery and casinos; as income on your tax return.
“Earnings of any kind are included in income. Profits include money and / or fair market value of bonds, cars, houses and other non-monetary awards, ”says the IRS.
For example, if you pay $ 1 for a raffle and win a $ 80,000 car, you should include the $ 80,000 on your return as income, explains the IRS. Likewise, if you win the lottery you may have to pay federal taxes if the prize is greater than $ 600 and state taxes if it is greater than $ 5,000.
4. You can deduct the losses you got from playing the lottery
To be able to deduct losses you must detail how much money you invested on Schedule A of Form 1040. The amount of money you deduct cannot exceed the amount of money you reported as winnings or earnings when playing the lottery. By reporting your losses on the return, you must be able to present evidence of your investment to the IRS such as receipts, tickets, etc.
For example, if you win $ 800 when playing the lottery, but you spent $ 400 during the year to play. You must report the $ 800 on Form 1040 and the $ 400 as lost.
5. You may automatically have some money withheld to pay taxes
Usually when the prizes are for a large amount of money, the government or the state could make an automatic withholding to pay the taxes. However, if this happens, you should contact a financial advisor to find out if you met and paid all the required taxes. Since in some cases the withholding of taxes automatically may be to pay only state or federal taxes.
If you want to increase the odds of winning the lottery, here are some applications that can help you.
1. Lottery App
If you spend a lot of work thinking about the numbers you are going to play in the lottery, the Lottery App can help you. Since this application is responsible for analyzing all the numbers that have won in the past to make a prediction of what the next winning numbers would be. In addition to giving you the numbers that are highly likely to come out, you can find out what the winning numbers are for the week. Lottery App is available at Google Play.
2. Crowd Lotto
Playing the lottery among multiple people is a good way to increase the odds, however it can be a headache to collect money and keep track of people who have paid. In this case, the Crowd Lotto app can help you stay organized, as you can create a list of people who have paid and how much money each person invested. In addition, the application informs you of the numbers that have a high probability of winning. Crowd Lotto is available at App Store.