Q&A: Are lottery winnings in a foreign country taxable in the US?

Posted by Don W on September 25, 2010 under Expatriate Taxes, Foreign Bank Account Reporting (FBAR)

Q: I am a US citizen living in England.  If I were to win the UK lottery (which is tax free) – would I still be liable to pay taxes to the U.S?  I file U.S. taxes each year along with the foreign earned income form.

A: Yes, foreign lottery winnings are taxable by the IRS in the US (though they are generally exempt from the particular state income tax).  Do remember that if the aggregate value of of your foreign bank accounts exceed $10,000 at any time during the calendar year you have a legal requirement to file form TD F 90.22.1– please see the IRS FAQ page on FBAR (Foreign Bank Account Reporting).