The Massachusetts State Lottery will provide a withholding statement (W2G) on all prizes over $600.
However, if your Lottery prize is greater than $5,000, 24% of your prize will be automatically withheld and sent directly to the Internal Revenue Service. In addition, 5% is required to be withheld and sent to the Massachusetts Department of Revenue. Some winners will receive the W2G form at the time of prize payment. If not, you will receive a W2G form from the Lottery by mail in January.
Effective December 1, 2004, the Massachusetts State Legislature enacted a law that changed the threshold to which Lottery prizes are taxed. The law requires the Massachusetts State Lottery to withhold state taxes on all prizes of more than $600.00 as mandated by Massachusetts General Law Chapter 62B §2 as amended. Federal tax withholding will operate as before.
Please consult a tax professional for specific tax questions.
You may be eligible to deduct your losses. Deductions can be made on federal taxes up to the amount of your winnings and only if you itemize deductions on Schedule A of Form 1040.