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Wednesday, September 3, 2014

The Arkansas lottery: The taxman cometh in more ways than one

Posted By on Wed, Sep 3, 2014 at 10:04 AM

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The Arkansas Lottery, working on its somewhat bruised image, compiled a release yesterday on the $1 million in unpaid taxes and child support it has collected from lottery winners in its five years of existence.

That prompted some questions from me about when the withholding kicks in and also the take in state and federal income tax from big winning tickets.

Patrick Ralston provided the rundown:

First, any winning ticket over $500 is checked against the state database on taxes and past due child support computed by the state support collection agency. The lottery withholds from winnings if the debt is $100 or more.

Income tax withholding is required on all prizes of $5,000 or more. In five years, the tax take:

* State income tax: $9.4 million.

* Federal income tax: $34.1 million.

This is on top of an average of about $100 million a year in college scholarships from lottery profits (a figure that has declined sharply in recent years.)

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