Quote: Originally posted by Stack47 on Aug 13, 2008
"Well, I have to disagree with those who wrote "when you get paid." You asked "for those in the know" and I know. LOL"
If what you showed in red is from the IRS, it can't be any clearer than "when you get paid" and not the drawing date. It could apply to when the ticket is validated but in this scenario the hasn't been validated.
"A payment of winnings is considered made when it is paid, either actually or constructively, to the winner. Winnings are constructively paid when they are credited to, or set apart for, that person without any substantial limitation or restriction on the time, manner, or condition of payment."
"You have a 60 day window, so it's not always when you claim the ticket."
The 60 day window applies to choosing between cash option and the annuity after validating the ticket.
"However, if not later than 60 daysafter the winner becomes entitled to the prize, the winner chooses the option of a lump sum or an annuity payable over at least 10 years, the payment of winnings is considered made when actually paid."
"If you won in Sept and claimed it in March, you would not benefit from waiting, since it would be considered 2008 income. Sept does not fall into the 60 day window."
How could a player be entitled to or get payment before validating the ticket?
Lotteries offer advanced play and some even offer yearly subscriptions so it's possible a player could forget to check their ticket or just wait until the last drawing date before checking them. Can you imagine the outrage during an election year if the IRS added penalties and late charges for not filling on time because an 80 year-old jackpot winner waited until the advance play or subscription was up before checking their tickets?
"So, yes, you would be okay if you claimed the prize in Jan or Feb and paid taxes for next year and the Dec drawing would have no bearing on it."
On my ticket where it says I have up to 180 days to claim the winnings and not 60 days. Is there even smaller print that I can't see saying I might be subject to IRS penalties if I wait that long?
Do lotteries fill out W-2G forms and send copies to the IRS in December with "player to be named later"?
If "those in the know" say in which tax year depends on when the ticket is validated, I'll agree.