Gambling Tax Laws

Gambling winnings are considered income when it comes to filing your income tax return each year. Even if your winnings are not subject to withholding, you are still required to report them. Taxpayers can also itemize their deductions to claim their gambling losses.

Winnings of $5,000 and Up

Gambling winnings of more than $5,000 are subject to income tax withholding when they are won from sweepstakes, a wagering pool, poker tournaments, lottery or any other wager if the proceeds are at least 300 times the original bet.

Forms of Payouts

The above applies even when payouts are not received in cash. However, winnings that are not paid in cash, such as property, are assessed for fair market value.

Slots, Bingo and Keno

Gambling winnings from slot machines, bingo or keno are usually not subject to income tax withholding. You may need to provide your social security number to avoid withholding, or you may need to pay an estimated tax.

Forms

You should receive a W2-G from any payer who withholds taxes from your winnings. When tax is not withheld from the winnings, you should receive a 1099-MISC.

Backup Withholding

If you do not provide your social security number to the payer of your gambling winnings, they may have to withhold 28 percent for taxes. This rules applies to $1,200 from bingo or slot machines, $1,500 from keno and other gambling winnings of more than $600.

Resources

• IRS: Gambling Income and Losses
• Gambling Winnings Tax
• Taxable and Nontaxable Income

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