Lottery winners must report earnings

Winners in the state’s new lottery have several things to think about when they claim their prizes. TennCare eligibility, overdue student loans, and back child support are financial matters for winners to go along with reporting the income to the IRS for taxes.
Winners of under $600 can claim their prizes at local vendors in Sevier County and are responsible for making their own claim to the government on their winnings. However, winners of $600 or more must go to the district lottery office in Knoxville to claim their prize. Part of the process is filling out the two-page claim sheet that lets the IRS know how much they’ve won in the lottery.
With big cash prizes, those over $5,000, the federal taxes are taken out by the Lottery Board. The remaining balance of the jackpot is then given to the winner. Little-publicized is the fact that if a winner has overdue student loan payments or back child support payments over $100, those are also deducted from the winnings by the lottery.
Lottery winners also have to consider that their winnings are reported to a wide range of agencies. Welfare and TennCare rolls are informed of the earnings. A winner in a low-income bracket may find their state health care coverage or federal food stamp benefits cut due to hitting the jackpot.
Federal privacy laws prevent TennCare from stating how many enrollees have had their status changed since the lottery started earlier this year, but they do note that all their letters have reminders to recipients that they must report any increase in earnings. The lottery is a new consideration in additional income for the 1.3 million TennCare enrollees.
Several state watchdog groups on TennCare report that the agency has not done a good job in their eyes of making it clear that lottery winnings count as earnings and income that can affect an enrollee’s benefits.

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