Congratulations, your Louisiana Lottery numbers have come up -- but a lottery win in this state means both federal and state tax issues. Any gambling or lottery winnings get added to your income for tax purposes, and are declared to the appropriate state and federal agencies by the sponsor of the game. After the celebration, but before the shopping spree, ensure your tax ducks are all in a row.
Reporting Requirements
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If you've got a lottery win, the magic number to remember for tax purposes is $600. This is the threshold over which the operator must report your gain to the IRS as well as the Louisiana Department of Revenue and Taxation. The payer should also issue a W-2G, which is a statement of the amount you've won and which must be filed along with your federal and state income tax forms. Note that all gambling winnings are taxable, whether or not they are reported, and failure to report any win can bring a charge of tax evasion.
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Withholding Amounts
When you bring in a ticket to claim a prize of more than $600, Louisiana law requires that you provide a photo identification and your Social Security number. The state also requires that lottery operators withhold federal tax in the amount of 25 percent and state tax of 5 percent from each win over $5,000.
Non-Louisiana Winners
If you're from out of state and have hit on the Louisiana Lottery, then the state sees it as Louisiana-sourced income and requires you file a state income tax return, if you also have to file a federal return. The actual amount of tax you pay on the winnings depends on your own tax bracket. As with federal taxes, Louisiana has a schedule of graduated marginal tax rates, which rise with your level of taxable income. If the 5 percent withholding was too high on your win, then the state issues a refund.
Reporting to the IRS
On your federal tax return, you report gambling winnings as "Other Income" on Line 21 of your Form 1040. In theory, you can offset this amount by itemizing gambling losses on Schedule A, but this wouldn't help unless the sum of all your itemized deductions exceeds the standard deduction amount: $6,300 for single filers and $12,600 for joint filers as of 2015. The IRS does not apply any separate tax rate to gambling winnings, but don't forget that you owe the taxes whether you live in Louisiana, another state, or another country altogether, as long as you're considered a U.S. taxpayer.