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7.) Q. Will the New Jersey Lottery withhold income tax on taxable winnings?
A. The rate of withholdings is determined by the amount of the payout. Once it is determined
that a prize is taxable, i.e. over $10,000, the entire amount of the payout is subject to withholding, not
just the amount in excess of $10,000. Pursuant to the authority set forth in N.J.S.A. 54A:7-1(c) and
effective July 1, 2016, the withholding rates for gambling winnings paid by the New Jersey Lottery
are as follows:
5% for lottery payouts between $10,001 and $500,000;
8% for lottery payouts in excess of $500,000; and
8% for lottery payouts in excess of $10,000, if the claimant does not provide a valid taxpayer
identification number.
8.) Q. Am I required to make estimated income tax payments on my winnings?
A. If you believe that you will not have enough withholdings to cover your New Jersey gross
income tax liability, you should make estimated income tax payments so that you are not subject to
interest and penalties. For more information, see
http://www.state.nj.us/treasury/taxation/pdf/pubs/tgi-ee/git8.pdf.
9.) Q. Where should I report taxable New Jersey Lottery winnings on my tax return?
A. You should include taxable New Jersey Lottery winnings in the category of “net gambling
winnings” on your New Jersey income tax return.
10.) Q. Am I allowed to reduce my taxable New Jersey Lottery winnings by the amount I spent on
buying lottery tickets?
A. Yes. You may use your gambling losses to offset gambling winnings from the same year,
not to exceed the total of your winnings.
11.) Q. Am I required to substantiate my gambling losses used to offset winnings?
A. Yes, you may be required to substantiate gambling losses used to offset winnings reported
on the New Jersey gross income tax return. Evidence of losses may take several forms, including
providing losing tickets, a daily log or journal of wins and losses, canceled checks, notes, etc.
12.) Q. What if I choose to donate, split, or assign the proceeds of my lottery winnings?
A. The New Jersey Lottery permits donating, splitting, and assigning lottery proceeds. If you
choose to donate, split, or assign your lottery winnings, in whole or in part, it is taxable to the
recipient in the same way as for federal income tax purposes.