The amount of tax you will pay on any gain is ultimately determined by the rest of your income and deductions for the year. Most filers will not know their final tax liability for the year until they file a tax return. However, Wisconsin, like most states, automatically withholds a certain percentage of lottery gains.
Winnings Under $2,000
If you win less than $2,000 from the Wisconsin Lottery, you will be paid the entire sum without any deductions. Keep in mind, however, that no matter how small the winning, you must still report it to both the Wisconsin Department of Revenue as well as the Internal Revenue Service.
Winnings Between $2,000 and $5,000
If you have won between $2,000 and $5,000 from the Wisconsin Lottery, you will receive a check that corresponds to 92.25 percent of the winning. The 7.75 percent deduction will go to the Wisconsin Department of Revenue and will count toward your states taxes that have already been paid for the year. If, at the end of the tax year, your total tax payments to the state tax authority exceed your total tax bill, you will receive a state tax refund. If your tax liability exceeds the taxes you have already paid, you will owe money to the Wisconsin Department of Revenue. Therefore, the 7.75 percent deduction may be higher or lower than the ultimate effective tax rate that applies to your winnings.
Winnings Over $5,000
If you are lucky enough to win more than $5,000, the Lottery will deduct both the 7.75 percent state tax and a whopping 25 percent federal tax. These deductions, too, will count toward the taxes you have already paid for the year. Depending on your tax bracket, you may be due a refund from the Internal Revenue Service or have an additional tax liability. For very large winnings, you will likely owe more than the 25 percent withheld at the time of payment for federal taxes. A winning in the million-dollar range is likely to put most filers in the top federal tax bracket and result in additional tax liability at the end of the year.
Collecting Winnings
Winnings of less than $600 can be collected from any Wisconsin Lottery retailer by simply presenting the ticket. To claim prizes of $600 or more, you must visit the lottery office or mail your ticket. Make sure to sign the back of your ticket before mailing it to:
Prize Payment Wisconsin Lottery Madison, WI 53774