If you and another person (or group of people) went in a pool to buy a bunch of lottery tickets, and win, how does taxation work for people who split lottery winnings? Does one person claim the winnings and then "gift" the amounts to the others, or can the winnings be split before taxation and then each individual will just pay their own taxes?

  • It's my understand that Lotteries don't recognize multiple owners on the same ticket; so one owner claims the winnings and distributes. – quid May 22 '17 at 16:46
  • California does recognize multiple winners on a single winning ticket. – mkennedy May 22 '17 at 18:50
  • @quid - I believe most (if not all) government run lotteries in the US honor form 5754 and will split winnings. – TTT May 22 '17 at 18:54
  • It looks like I stand corrected! – quid May 22 '17 at 19:03

When you win a lottery or have other gambling winnings (over the threshold), you will receive a W-2G form from the payer. You could submit IRS form 5754 to the payer to inform them to split the winnings and issue separate W-2G forms accordingly.

Note that certain payers do not honor the form and will only distribute a single W-2G form. (The World Series of Poker is an example.)

  • WSOP is a different animal than a lottery though. Even if players have backers or percentages in each other, it is still considered the skill of a single entrant that determines the winner. Some of the backing contracts would make a shark blush. – JohnP Apr 13 '18 at 14:50

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