If you’re planning to play the lotto, or if you’ve already been playing the lotto, you’ll want to know what you’re actually getting and what you’re not. After all, if you have to pay taxes you’re going to get less money than you might think. And unfortunately, in many countries, you are going to have to pay at least something in taxes on your winnings.
Countries where you don’t have to pay taxes on lotto winnings
There are actually quite a few countries where you don’t have to pay any taxes on your lotto winnings as well. For example, Australia, Canada, Finland, Germany, Ireland, New Zealand, South Africa, the United Kingdom, and several European countries do not require any taxes on your lotto winnings.
All you have to do win the lottery in one of these countries. If you do, you get the lump sum payout immediately. And you don’t pay any taxes at all. That makes it an even bigger win for you, no matter what the prize amount would be. But keep in mind that only happens if you live in that country and win the lottery there.
Countries where you do have to pay taxes on lotto winnings
Other countries, including the United States, require you to pay taxes on your lottery winnings. In fact, you could pay quite a bit in taxes by the time the government is done taking their cut. And that’s why prizes in the United States especially are rarely what they seem to be. Even a large prize can be cut down by quite a bit.
For example, many people choose to take the smaller payout so they can get their money all at once rather than getting paid every year. If you do that in the United States the government gets to step in and take a portion of the lump sum right off the top. And then you have to pay regular taxes on it as well.
A $100,000 win in the United States could end up netting only $70,000 after all of the taxes and fees have been taken out of it (and the amount that’s taken off the top for the privilege of getting your money all at once).
What if I win the lotto in another country?
If you’re playing the lottery in a country aside from the one that you live in you have to follow the laws of that country. If they charge winners taxes on lottery winnings you will have to pay those same taxes. If they do, in most cases your home country will not require you to pay additional taxes on the money, which helps you save a little more.
If the country you win in does not charge taxes, however, you can still be billed taxes by your own country. This could come in the form of income taxes at the end of the year or any other, depending on the country that you live in.
