If you are going to win a lottery jackpot, Florida would be a good state in which to do it. The Sunshine State has no state income tax, leaving you only to figure out how much in federal income tax you will owe.
Automatic Withholding
If you win $5,000 or more in a lottery and have a Social Security number, Florida makes things easy for you by automatically withholding 25 percent of the winnings to cover federal income taxes. You may owe more when you file your income tax return if you are in a higher tax bracket. If you are in a lower bracket, you may get a refund. If you are a citizen or resident alien without a Social Security number, Florida officials will withhold 28 percent of any winnings over $600, and if you're a non-resident alien, they will withhold 30 percent of any amount of winnings.
Calculating Your Own Taxes
When it comes time to file your income tax return, you report gambling winnings as "Other Income" on line 21 of your 1040. You can estimate the portion of your winnings that will go to taxes based on your tax bracket. For example, if you are in the 15 percent tax bracket and you win $2,000, you can expect to owe $300 in taxes. If your lottery winnings bump you into a higher tax bracket, you could wind up owing more.
