Every year, people flock to casinos in hopes of hitting it big. Since sports betting has been legalized, more people engage in gambling than before. Especially because they no longer have to travel to casinos or states where gambling is legal to partake.
One thing to be aware of, though, is that certain winnings are taxable and are reported on IRS form W2-G. This is a document which outlines your gambling winnings from a specific institution. That institution prepares the form to send to you and the IRS.
How to receive your W-2G
Remember that it’s the gambling establishments responsibility to fill out and submit form W-2G to the IRS. The copy that you receive is for you to report on your tax returns. If you haven’t received your W-2G or you lost your W-2G, contact the gambling institution to get it reissued or contact the IRS directly since they will already have a copy. You may get the form more quickly if you reach out to the casino or sportsbook but both they and the IRS can get you the lost W-2G form.
Gambling Taxes on Winnings
Only winnings above a certain amount in certain games are reported on IRS form W-2G. It is important that you make sure you understand that the term “winnings” is defined as a net amount. For example, if you wager $1,000 and win $2,000, your winnings are $1,000.
Only winnings above a certain amount from specific games will be reported on form W2-G.
- Slot machine and bingo winnings of $1,000
- Keno winnings equal to or greater than $1,500.
- Poker tournament winnings exceeding $5,000
- Any lottery or sweepstakes winnings over $600
- Any other gambling activity in which you won 300 times the wager
How much of my winnings are withheld?
This simple question, like most tax-related inquiries, has a complicated answer. Gambling establishments withhold 25% of winnings for individuals who have a Social Security number on file and 28% for all others. Since these winnings are included in taxable income, the individual’s tax bracket ultimately determines how much is withheld.
What about gambling losses?
The nature of gambling includes the probability of experiencing losses. Don’t worry, these can be deducted as well, although you won’t receive IRS form W-G2 outlining losses. Keep records of your wagers and losses and then itemize them on Form 1040, Schedule A as “Other Itemized Deductions.” Be aware, though, that the number of losses which are deductible cannot exceed the number of winnings reported on your tax return.
While a summary of your winnings will be detailed in IRS Form W-2G, it’s a good idea to still keep a record of your winnings and losses. You can not only reconcile with the W2-G numbers you receive but also itemize losses on your 1040 when that time comes. If you have a lost W2-G, you have two options for tracking down a missing W2-G: through the establishment or the IRS. For further assistance on how to file your gambling winnings or losses for this tax season, reach out to a TaxSlayer certified professional now and we’ll walk you through everything you need to know and account for.