How Much Taxes Do You Have To Pay On Gambling Winnings
- How Much Taxes Do You Have To Pay On Gambling Winnings Without
- How Much Taxes Do You Have To Pay On Gambling Winnings 2019
- How Much Taxes Do You Have To Pay On Gambling Winnings Real Money
- How Much Taxes Do You Have To Pay On Gambling Winnings Cash
- How Much Taxes Do You Have To Pay On Gambling Winnings Gambling
Generally, you'll receive an IRS Form W-2G if your gambling winnings are at least $600 and the payout is at least 300 times the amount of your wager.
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- Yes, whether you gamble at land-based or online casinos, the money you earn is subject to federal income tax. Known as gambling income, the money you earn from wagers and bets as well as lotteries, sweepstakes, etc. All must be taxed. In some cases, you will be provided with tax forms that must be turned in to the federal government.
- Taxes on Lottery Winnings, Raffles, Charity Drawings, and Sweepstakes by Wager. Tax on winnings should be reported to you in Box 1 (reportable winnings) of IRS Form W-2G. This includes lottery winnings, sweepstakes you entered by making a wager, church raffle tickets, or charity drawings.
- But if you win $5,000 at the slots one day but then take a $5,000 gambling loss later that year, you can use that loss to cancel out your winnings and avoid paying taxes on them.
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This article was fact-checked by our editors and Jennifer Samuel, senior product specialist for Credit Karma Tax®.
Gambling may just be a hobby to you, but there’s nothing casual about it when it comes to filing your federal income taxes.
Nearly two-thirds of Americans gamble, according to a 2016 Gallup poll. And while you might think that winning a few bucks from a scratch ticket or a weekend trip to Vegas isn’t a big deal, the government considers every dollar you win from gambling as taxable income.
As a result, it’s important to understand how to report your gambling winnings, what to include and how you can use your losses in your favor. Here are some things you should know about how gambling winnings are taxed.
1. You must report all your winnings
How Much Taxes Do You Have To Pay On Gambling Winnings Without
Depending on how much you won during the year, you may receive a Form W-2G listing your gambling winnings. But even if you don’t receive the form, you’re still required to report all your winnings as “other income” on your tax return.
“All cash and non-cash gambling winnings are taxable and should be reported as ‘other income,’ ” says Patrick Leddy, partner at Farmand, Farmand & Farmand LLP. This includes any winnings you received from casinos, lotteries, raffles or horse races. Non-cash winnings, such as prizes like cars or trips, are also considered taxable income and are taxed based on their fair market value.
To make sure you keep track of both your winnings and losses, record the following details every time you gamble:
- The date and type of your gamble or gambling activity
- The name and location of the gambling establishment
- Names of other people who were with you, if applicable
- How much you won or lost
- Related receipts, bank statements and payment slips
2. You can deduct some losses
How Much Taxes Do You Have To Pay On Gambling Winnings 2019
No one likes to talk about how much money they lost gambling. But when it comes to your tax return, being honest can save you money. That’s because the IRS allows you to deduct gambling losses.
Though you may not be able to deduct all your losses.
“Taxpayers can deduct gambling losses only up to the amount of their gambling winnings,” says Leddy, “and only if they itemize their deductions.”
For example, if your gambling winnings totaled $5,000 in the tax year, but you lost $6,000, you can only deduct $5,000 of those losses. Keep in mind, itemizing your deductions may not afford you the maximum tax benefit. If your total itemized deductions — which can also include charitable donations, home mortgage interest and medical expenses — don’t exceed your standard deduction, itemizing might not be the optimum choice for you.
Can I deduct the cost of a gambling addiction recovery program?
IRS Publication 502 lists alcohol and drug-related addiction-recovery programs as eligible for the medical expense deduction. However, gambling addiction isn’t included. If you need help dealing with a gambling addiction, you can call the Substance Abuse and Mental Health Service Administration’s 24/7, 365-days-a-year hotline at 1-800-662-4357.
How Much Taxes Do You Have To Pay On Gambling Winnings Real Money
3. Even illegal gambling winnings are taxable
According to the American Gaming Association, it’s estimated that Americans spend more than $150 billion per year on illegal U.S. sports betting — and yes, that can include your office March Madness pool.
A May 2018 U.S. Supreme Court ruling opened the door for states to legalize sports betting, but not all have done so. That said, any winnings you receive from betting on sports legally or illegally (or from any illegal activity, for that matter) are still taxable.
Learn more about sports betting and taxesBottom line
So how are gambling winnings taxed? Every dollar you win from gambling, whether legally or not, is considered taxable income. As a result, it’s critical that you keep a record of your winnings so that you can report them accurately. You’ll also want to keep track of your losses so that you can use them to qualify for a tax break.
How Much Taxes Do You Have To Pay On Gambling Winnings Cash
Once you’re ready to file your taxes, Credit Karma Tax® can help show you where to include both your winnings and your losses so that you can maximize your tax refund if you’re owed one.
Jennifer Samuel, senior tax product specialist for Credit Karma Tax®, has more than a decade of experience in the tax preparation industry, including work as a tax analyst and tax preparation professional. She holds a bachelor’s degree in accounting from Saint Leo University. You can find her on LinkedIn.