Claiming Gambling Winnings On Taxes

Posted By admin  On 11.05.21

When you file your federal income tax this year, be sure to account for any gambling winnings. That’s taxable income, and if you’ve won enough money, the casino has filled out a form and reported that income to the IRS.

Attention: Canadians & US Non Residents! Claim a US gambling refund on the casino winnings tax withheld by the IRS. A casino tax refund can be obtained for as low as $150. Take control of your casino rebate and recover your IRS withheld gambling winnings. All things are possible when you win the lottery: You can complete your bucket list, quit your job or buy that Harley. You also get to pay a bunch in taxes. Depending on what state you live in, you might give nearly half your winnings to the government. You will owe taxes on your winnings the same tax year you collect the money.

That might sound like bad news, but it’s not all bad news. If you’ve kept a diary of your losses at the casino, you can use that to offset your winnings. You only pay taxes on your net winnings from the casino.

Claiming

But you can ONLY deduct losses up to the amount you won. You cannot deduct more than that. Also, if you’re going to take this deduction, you do have to itemize your return.

I like to suggest to people that they keep a blog and sell advertising on it as a side hustle. If you do that, it’s theoretically possible to consider any money you spend at the casino a tax deduction. I’m not an accountant or a lawyer, so consult a professional before following this strategy.

You can read the official IRS information about gambling income on the IRS website. I’ll provide further coverage and observations in this post.

How to Keep a Gambling Diary

If you gamble at all in a casino, you should keep a gambling diary. This just tracks your wins and losses. You should include the following information in your gambling log:

  1. The dates you were gambling
  2. The games you were playing
  3. Where you were gambling
  4. Who was with you
  5. How much you won or lost on the trip

You should also keep supporting documentation. This might be the form that the casino provides when you win a jackpot. It could also be the receipts from the ATM for the money you withdrew to gamble with.

You can also ask the casino to give you a record of your action based on what is reported when you used your slots card. And yes, you should always use your slots card while you play.

What Does the IRS Say About Gambling?

The information presented on the IRS website is aimed at casual or recreational gamblers. If you’re operating a casino or bookmaking operation, this information might not apply to you.

The most important piece of information on the page is that yes, your winnings are completely taxable. You are required to report that income.

They provide examples of casual gambling activity that might count:

  • Casino games
  • Horse betting
  • Lotteries
  • Raffles

Cash isn’t all that counts as income either. If you win a car or a vacation, the fair market value of that prize is taxable.

The casino uses a form called the W-2G, Certain Gambling Winnings to give you a record of winnings beyond a certain level that you’re required to pay taxes on. You’re required to report this income on your tax return in the “Other Income” section of your tax return.

As I pointed out earlier, you can deduct losses, but only up to the amount that you win. If you saw a net loss for the year, you can only deduct the amount you won.

How Much Tax Do I Owe on My Gambling Winnings?

As of this writing, the tax rate for gambling winnings below $5000 are a flat 25% of the amount you won. But that’s only if you’re a recreational gambler.

If you’re a professional gambler, you pay tax on it at the same rate as your taxable income. Professional gamblers must file taxes as if they’re self-employed.

What About State Taxes?

There are 50 individual states in the United States of America. Each of them has its own law regarding taxes. Texas, for example, has no income tax at all. It does, however, have a higher sales tax than most other states.

So, yes, some states require you to pay taxes on your winnings, while others might be more forgiving. I recommend that you check with an accountant or a tax attorney regarding your specific situation in your state.

What About Nonresidents?

If you’re a nonresident, you report your income on Form 1040NR. The NR stands for nonresident. The tax rate for gambling winnings for a nonresident is slightly higher, 30% instead of the usual 25%. Nonresident aliens don’t get to deduct their gambling losses either.

There’s an exception for Canadian citizens gambling in the United States. They’re allowed to deduct their gambling losses just like American citizens can. This is part of a tax treaty between the United States and Canada.

President Trump has been getting the United States out of treaties with other countries. So, you should double-check this fact with your tax professional, too.

We encourage you to double-check all this information with your tax professional in case of any changes. That’s just sound fiscal policy.

Other Countries Do It Differently

Claiming Gambling Winnings On Taxes

If you live in the United Kingdom, you do NOT have to pay income tax on your gambling winnings. Even if you’re playing in another country, if you’re an English citizen, you probably don’t have to pay taxes on your winnings there. That’s because the UK has treaties with other countries related to taxes that cover you.

That being said, if you’re a huge winner, the UK does charge you if you win more than a certain amount. They assume that anyone winning more than that amount isn’t a typical recreational gambler. After all, if you make enough money at an activity that it pays all your bills, it’s hard to not consider it income.

England is more typical of other countries’ attitudes toward gambling winnings and taxes than the United States. Most countries don’t tax money you’ve won gambling.

France, Mexico, and Spain are exceptions. Each of them require you to pay taxes on your winnings, although they don’t seem to charge as much as the United States.

Conclusion

My best advice to any of my readers is to always pay your income taxes. There’s no positive expected value in trying to get out of it.

Also, don’t use a blog post like this one to get the real details about paying taxes on your gambling winnings. Visit the official IRS site if you’re from the United States, and follow the instructions there.

Or better, consult a tax professional. Finally, if I can offer one more piece of advice: Keep detailed records.

stacks
I've had people ask me to claim a slot machine jackpot for them. Is this legal?
Let me explain…
Person A wins a jackpot over $1200. Person B agrees to claim it (before the slot attendant arrives) -- usually for some money. Casino gives paperwork and payout to Person B. Is Person A breaking any rules from the casino? any tax rules by state? any federal rules?
would love some advice on this. i guess the question is, can someone else claim Person A's winnings? Doesn't this happen in the lottery?
timely help is appreciated
GWAE
I don't have an answer for you but I am interested as well.
Last year one of my friends was sitting at a bar in the casino. The guy next to him was chatting with him while they both played keno. A few minutes later the guy said 'oh F' , my buddy looked over and saw that he won $1500. He said congrats but they guy told him he couldn't get the pay out. He handed my buddy his card and asked him to collect the money and they would split it. The guy left the casino very quickly.
He was either on the banned list and would get in trouble or was afraid his wife would find out since it was a taxable prize. He ended up collecting the money and getting the w2g. My buddy and I deliberated for about an hour trying to figure out what to do with the money. He decided to call the guy and split it. He was afraid that if he didn't the guy may call the casino and make up some kind of story to get him in trouble. I tried to convince him to just keep the money.
Sorry for derailing thread, I wanted to share my story.
Expect the worst and you will never be disappointed. I AM NOT PART OF GWAE RADIO SHOW

California Gambling Winnings Taxes

onenickelmiracle
Definitively opens the door to trouble. If it were so easy casinos would just claim them with identities of the dead, homeless and missing.
terapined

I've had people ask me to claim a slot machine jackpot for them. Is this legal?
Let me explain…
Person A wins a jackpot over $1200. Person B agrees to claim it (before the slot attendant arrives) -- usually for some money. Casino gives paperwork and payout to Person B. Is Person A breaking any rules from the casino? any tax rules by state? any federal rules?
would love some advice on this. i guess the question is, can someone else claim Person A's winnings? Doesn't this happen in the lottery?
timely help is appreciated


I think its fine. In the case of the lottery, its a bearer document. He who holds it owns it.
Lots of 5 per centers at the track, will cash a huge win for a 5 per cent cut.
The only people trying to go after the 5 per centers is the IRS.
'Everybody's bragging and drinking that wine, I can tell the Queen of Diamonds by the way she shines, Come to Daddy on an inside straight, I got no chance of losing this time' -Grateful Dead- 'Loser'
tournamentking
I've done this for a friend twice. He wins a jackpot greater than $1199.99, and I, who was sitting next to him, got the tax slip. We just swapped seats. Both times we didn't remove his card but the attendant noticed and said it doesn't matter what the name on the card is, it only matters who was playing at the time of the hit. If they had reviewed the video they would have given the tax slip to him, but they didn't. I also imagine we would have both been thrown out. But it is not against the law.
Perdition
Wonder if anyone has ever refused a payout because they would have ended up having to pay more in taxes if the W2G showed up on their record.

State Taxes On Gambling Winnings

EvenBob

Wonder if anyone has ever refused a payout because they would have ended up having to pay more in taxes if the W2G showed up on their record.

How To Claim Gambling Winnings On Taxes


Some people don't file taxes at all and this
would put them on the grid. I knew people
in the antique biz who hadn't filed a return
in 20 years.

Claiming Online Gambling Winnings On Taxes

'It's not enough to succeed, your friends must fail.' Gore Vidal
Perdition
So at that point is the money just surrendered back to the casino or do they do the move where they take 28% and give you the rest?

Claiming Internet Gambling Winnings On Taxes

onenickelmiracle

Gambling Winning Claim On Taxes 2019

Wonder if anyone has ever refused a payout because they would have ended up having to pay more in taxes if the W2G showed up on their record.

Once I was at the casino and heard the bells go off on the other side of the bank. I walk 5 feet around and nobody is there as I'm standing in front of the machine showing a $5000 jackpot on a quarter Munsters game. At the same time I just got there, a man appeared from nowhere, says yes weirdly and runs to sit at the machine. I couldn't help but be very suspicious he didn't trigger it and someone else hit it an ran out of the casino. The exit was nearby only 10 feet away so it's possible. The whole incident just never felt right.
#FreeNATHAN #Paytheslaves
terapined

Once I was at the casino and heard the bells go off on the other side of the bank. I walk 5 feet around and nobody is there as I'm standing in front of the machine showing a $5000 jackpot on a quarter Munsters game. At the same time I just got there, a man appeared from nowhere, says yes weirdly and runs to sit at the machine. I couldn't help but be very suspicious he didn't trigger it and someone else hit it an ran out of the casino. The exit was nearby only 10 feet away so it's possible. The whole incident just never felt right.


This all seems kind of absurd. Say you want to stay off the grid and you don't pay taxes. Last thing you should be doing going into a casino where you can be put on the grid and made to file a return by winning big.
'Everybody's bragging and drinking that wine, I can tell the Queen of Diamonds by the way she shines, Come to Daddy on an inside straight, I got no chance of losing this time' -Grateful Dead- 'Loser'