Don't forget about paying Uncle Sam his share of your lottery winnings

So you won big in the lottery, eh? Well Lady Luck may be on your side but don't forget about Uncle Sam. You have to report every cent you earn in the lottery when you file your tax return, that includes those small $1 and $2 payouts. Here's how make sure you're on the up and up come tax time.

Sylvester Stewart ended up with $40 after buying two $2 scratch-off tickets at a Little Rock gas station. But as for the taxes on his winnings? "I haven't ever heard of anything like that until today," he said.

He's not alone. A lot of people we talked to recognized they'd have to pay taxes once they thought about it. But they didn't know what documentation they needed to show to Uncle Sam come next April. Accountant Angela Frazier from EGP Accounting helped us understand. She said, "It's really not that hard to comply with the requirements."

You'll go to a claim center like the one in downtown Little Rock to pick up your check if you win more than $500. And for big amounts of $600 or more, lottery officials will give you a W-2G form for tax reporting purposes. Other than that, it's up to you. Frazier explains, "Just keep a log and that way when they do the tax return they'll be able to see how much they've spent for that year."

Frazier says you should write down the date of purchase, where you bought your ticket, how much you spent, and how much you won to include as part of your income for the year. While you have to report everything you win to the IRS, the good news is you can claim the amount you spent on tickets on your tax return. But you can't use the EZ form. You have to use the regular form instead to itemize the deductions.

One easy way to calculate that is to just hang onto your losing tickets. But the way the law works you can't deduct more than you've won. So if you spent $500 trying to strike it rich and only won $20, you can only deduct $20. It makes Sylvester Stewart think twice about how he spends his winnings. "Probably just save it," he said.

Now, obviously a lot of of people have bought tickets and haven't been keeping records. That's why FOX16 is telling you about this now. Frazier says if you start keeping a log of this now while these tickets are still fresh in your mind it will save you a lot of trouble next year. If you don't pay what you owe to the state and the nation you could be looking at monetary penalties and fines.