Powerball Tax Tips

·        Lottery winnings are taxed as ordinary income.  Even if an installment winner sells the future income stream to another party, the sales is not considered capital gain eligible for lower tax rates.

·        California excludes lottery winnings, the catch is that it must be sold from a California lottery retailer. So a California resident buying a Mega Millions ticket from another state will subject the lottery winners to California tax that could subject you to the maximum 13.3% (which includes the 1% mental health surtax) California tax since it is not sold by a California lottery retailer.

·        FYI: California lottery records are subject to disclosure including your full name, the name and location of the retailer you bought the ticket, the date you won and the amount of your winnings.