Foreign Lotteries Are Not for U.S. Citizens? Let’s Look Closer
If you’re an American and you want to get in on that international money by playing their lotteries, the US Postal Service has a little advice for you—“Don’t Do It!” Well, if that doesn’t seem unfair! International folks can play our Mega Millions and PowerBall, thus making our chances at winning them smaller, but we cannot play theirs? Isn’t that the pot calling the kettle black?
What is the Deal?
While there is no law that says Americans cannot play a foreign lottery, there are laws saying that prohibits us from buying a ticket, share, or a chance of winning a by mail, telephone or online. So… That pretty much says it is illegal. This law is meant to protect us from getting scammed from dishonest crooks like the Nigerian Prince a.k.a. Albert Onolunose from Canada who used the telemarketing tactics and the postal system to scam $3 million from people in the US. According to the US Postal Inspection Service, it is said to be impractical because we cannot be sure we are getting the ticket that we paid for. Not only that, but it is an invitation to have our identities stolen.
I guess we cannot fault the government for wanting to protect us from crooks abroad, but we are grown adults. Why are we not allowed to make that decision for ourselves? If we want to throw our money away that should be our choice on where and how we do it, dammit!
Getting Past the Law…?
We may have laws that say we cannot play foreign lotteries from home; however, there is nothing that says we cannot play them if we go on vacation. The only caveat is that your winnings may be subjected to double taxation—in the original country and in the US as an income tax. As a rule, Americans have to report any kind of income on our tax returns, including lottery winnings. This does not necessarily mean we have to pay taxes on it though, that depends on how much the winnings are.
If you live and work abroad, you may be eligible for foreign earned income exclusion, while lets you exclude a particular amount of income that you earned while abroad. In this case, the only income that is taxed is money that you earned by either working or being self-employed. Therefore, this means any foreign lottery winnings is not treated as an earned income, but it still needs to be reported.
I know it is confusing. To make things even more confusing, we have foreign tax credits, which is designed so that you do not have to pay tax on the same income (lottery winnings) in more than one country. To make a long and boring story short, you can play foreign lotteries, but it may be more hassle than it is worth. Especially since, you have to go to the country in question, play their lottery and wait for the drawing. Then you will have to pay their taxes and come home and maybe pay US taxes and a slew of other nonsense… Maybe it is just easier sticking to our own lotteries.