Michigan Lottery Winning Tax for out of state Resident?
I won 2 four digit straight numbers and the price is $5000 each. My question is that, i am Illinois state resident and i won the lottery in Michigan, how much tax will i pay at the lottery place?
Do i have to pay tax upfront and than pay tax again at the end of a year?
Thanks in advance.
- Bostonian In MOLv 71 decade agoFavorite Answer
If MI taxes lottery winnings, MI state income taxes will be withheld along with the Federal income taxes. You'll have to file a non-resident MI income tax return showing only the lottery winnings and pay any MI tax due if the withholding was not enough. If it was too much, you'll get a refund.
IL is entitled to tax that win as well, so it must be included in your IL return. IL will give you a credit for the lower of the MI tax actually paid OR the amount of tax that IL would have collected on it. This works out such that you will pay state income tax on the lottery win at the higher of the MI and IL rates. You are not double taxed, however.