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What Percentage of Lottery Winnings Can They Take for Back Child Support?

If Owing Back Taxes or Child Support, Will the Government Take .

Winning the lottery may seem like a dream come true, but there can be some complications. If there is a child support order and back support owed, you may not see all of the big payoff. Most states have laws allowing the seizure of lottery winnings for certain financial obligations, and child support is one of them.

Withholding on Winnings

State lottery authorities will pay out the winnings from your lucky lottery ticket. Before they cut the check, however, they will withhold for income taxes (federal and state), and research other debts you may have. They may have the authority to pay on court judgments, back taxes, and student loans, which carry a federal guarantee. Most states also allow their lottery agencies to verify and withhold past-due child support in any amount. For example, the state of New Jersey runs such a check on anyone who wins more than $600 from any lottery.

Interception Procedure

Each state writes its own law on the interception of lottery winnings. California, for example, has set up the Interagency Intercept Collection Program. A child-support agency with a delinquent account will submit the information to the IICP, which keeps the information on its books. The lottery agency submits the Social Security numbers of lottery winners; other triggering events could be a payment from the state’s unclaimed property office, or the payment of a tax refund from the state tax authority. Local child-support agencies have first priority in this system; non-local support orders come second.

No Limit Collections

The states don’t place a limit on the percentage of past-due support that can be subject to an intercept. If the lottery pays $25,000 and the past-due child support is the same amount, then the entire prize can be seized. This general rule will prevent a situation where a multimillion-dollar winner is only required to satisfy a few thousand dollars of past-due support, if state law happened to limit the percentage that could be paid.

Modification

In addition, a lottery win can lead to a change in current child support that is due. The custodial parent can petition the court for a modification of the support order. In many states, a substantial change in the financial circumstances of the parent who’s paying can be valid grounds for a change in support. Since a lottery prize is considered income (and taxable income, at that), it will allow a change in the calculation of the monthly child support amount. For that reason, lottery winners who have child support in the picture would be wise to consult an attorney versed in child support and marital separation agreements.

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Winning the lottery may seem like a dream come true, but there can be some complications. If there is a child support order and back support owed, you may not see all of the big payoff. Most states have laws allowing the seizure of lottery winnings for certain financial obligations, and child support is one of them. ]]>