Cashing a lottery ticket for a family member - tax implications?

My aunt recently won a decent amount on a scratch-off lottery ticket (like $5,000) but she doesn't drive and has mobility issues. She asked me to cash it for her at the lottery office since it's over the amount they'll pay at the store. I'm concerned about the tax situation here. If I cash it, doesn't that mean I'll be responsible for paying taxes on her winnings? Will I get a tax form at the end of the year? And if I just give her the money, does that count as a gift from me to her that I need to report? I don't want to cause problems for either of us with the IRS. Has anyone dealt with this before? What's the right way to handle cashing a lottery ticket for a family member without messing up our taxes?

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20 comments

Andre Dupont

•8M

This is actually a common situation, but you're right to be concerned about the tax implications. If you cash the ticket, the lottery commission will issue a W-2G form in YOUR name, not your aunt's. This means the IRS will expect you to report this as income on your taxes. The proper way to handle this is to have your aunt complete a form giving you power of attorney specifically for claiming this prize. Many state lottery commissions have a specific form for this purpose. This way, the W-2G will be issued in her name, and she'll be responsible for the taxes. If you cash it without doing this, technically she would need to give you the money to pay the taxes, but this gets messy. Also, if you give her the full amount, it could potentially be seen as a gift from you to her, though under the annual gift exclusion amount.

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Andre Dupont

•8M

With a proper power of attorney form, the lottery commission can typically issue the check in your aunt's name, but you can cash it as her representative. Alternatively, some states will allow the check to be issued to you but with documentation showing you're claiming on her behalf. For check cashing concerns, most banks will accept deposits of checks made out to someone else if that person has signed the check and you have documentation showing you're authorized to handle their financial matters. The specific procedure varies by state lottery commission, so I'd recommend calling them directly to ask about their process for someone claiming a prize on behalf of a family member with mobility issues.

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Zoe Papanikolaou

•8M

After spending hours trying to figure out how to handle a similar situation with my grandfather's lottery winnings, I discovered a service called taxr.ai (https://taxr.ai) that was super helpful. They have tax experts who specialize in unusual situations like lottery winnings and family claims. I uploaded my grandfather's ticket info and my situation, and they gave me step-by-step instructions on how to handle it properly without triggering tax issues for either of us. They even provided the exact forms I needed for our state lottery commission and explained what documentation to keep for tax time.

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Zoe Papanikolaou

•8M

They have a really reasonable fee structure based on the complexity of your situation. For something like lottery winnings, it was much less than what a CPA would charge for a consultation. The value was definitely there considering the peace of mind. The service combines AI analysis with review by actual tax professionals. You start by uploading your documents and explaining your situation, then their system analyzes it and a real tax expert reviews everything and provides personalized guidance. You can ask follow-up questions too, which was super helpful when I needed clarification about our state's specific requirements.

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Mei Lin

•8M

Just wanted to follow up about my experience with taxr.ai (that was mentioned above). I was skeptical but decided to try it for a similar situation with my brother's lottery winnings. Really impressed with how thorough they were! They provided specific documentation for our state lottery commission and explained exactly how to handle the reporting so the taxes would be assigned to the right person. Saved us from what could have been a real headache at tax time. Definitely worth checking out if you're in this situation.

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Liam Fitzgerald

•8M

I had the WORST time trying to reach my state lottery commission to ask about this exact situation. Called for days and couldn't get through. Finally used Claimyr (https://claimyr.com) to get someone on the phone from the commission. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Basically they wait on hold for you and call when a human picks up. Got through in about 45 minutes when I'd been trying for 3 days! The lottery office explained they have a specific form for family members to claim tickets and avoid tax issues. Would have never known without actually talking to someone there.

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Liam Fitzgerald

•8M

They make money by charging a fee for the service - it's a legitimate business model. They're essentially providing a time-saving service, which plenty of people are willing to pay for. They don't listen to your calls - they just connect you when a real person answers. Trust me, I was skeptical too. But when you've been trying to reach a government office for days with no success, you get desperate. It's not about getting an automated response - the problem is getting through the hold times to reach an actual human. That's what they solve. I had a 20-minute conversation with an actual lottery commission employee who gave me specific information about my situation.

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Giovanni Mancini

•8M

Ok I need to eat my words. I tried Claimyr after posting my skeptical comment and I'm shocked it actually worked. Got through to my state lottery commission in about 30 minutes when I'd been trying for over a week. Found out my state has a specific "Prize Claim Authorization Form" that lets someone claim a ticket on behalf of another person. The taxes still go to the actual winner. They email you the form and everything. Would have never figured this out from their website which is completely useless.

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NebulaNinja

•8M

You're right that not every state allows completely anonymous claims. Currently, only about 11 states allow lottery winners to remain completely anonymous, including Delaware, Kansas, Maryland, North Dakota, Ohio, South Carolina, Texas, and a few others. However, many other states allow claiming through a trust or other legal entity, which provides a layer of privacy even if not complete anonymity. The rules vary significantly by state, so you definitely need to check your specific state lottery commission's rules. In some cases, even if your name is technically public record, claiming through a trust can keep your name from being prominently featured in press releases or announcements.

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Omar Hassan

•5M

As someone who works in tax preparation, I can't stress enough how important it is to handle this correctly from the start. The power of attorney approach mentioned by Andre is absolutely the right way to go. I've seen too many cases where well-meaning family members cash lottery tickets and create unnecessary tax complications. Even if you report the winnings as income and then claim you gave the money as a gift, the IRS can question the legitimacy of this arrangement, especially with larger amounts. Most state lottery commissions are actually very accommodating when it comes to mobility issues or situations where the winner can't physically claim the prize themselves. They deal with this regularly and have established procedures. The key is doing the paperwork upfront rather than trying to sort it out after the fact. Also, keep detailed documentation of everything - the original ticket, any forms you complete, communications with the lottery commission, and how the money is transferred to your aunt. This will protect both of you if there are ever any questions about the transaction.

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Andre Dupont

•5M

This is really helpful advice, Omar! I'm actually in a similar situation right now with my grandmother who won about $3,000 on a scratch-off. She's in assisted living and can't get to the lottery office herself. You mentioned that lottery commissions are accommodating - do you know if they typically accept simple power of attorney forms, or do they require their own specific paperwork? I'm trying to avoid any delays since some tickets have claim deadlines. Also, when you say "detailed documentation," should I be taking photos of everything or are there specific records that are more important than others from a tax perspective?

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