• Casino Winnings Tax In India
• Casino Winning Tax Laws
• Casino Winning Tax Form
• Casino Winnings Tax Limit
• Casino Winnings Tax Philippines

Gambling winnings are taxed by both the IRS (Internal Revenue Service) and by many states in US All winnings from all forms of gambling are taxable and must be declared as income on your tax return. All losses from all forms of gambling are deductible as an itemized deduction for recreational players, limited to the amount of winnings declared. “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. Gambling winnings are fully taxable and you must report the income on your tax return. Gambling income includes but isn't limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes, such as cars and trips. All winnings that you realize in a casino are taxable as income, both on the state and federal levels. So, you should be reporting those wins on your annual tax returns. Though many people scoff at the notion of reporting cash income to the government, it counts the same as income from a check or direct deposit in the eyes of the taxman. This depends massively on where you live. If you are playing at online casinos in the UK, there is no gambling winning tax. But in the USA, the gambling winning tax can be above 20% in some states. Do I need to declare all gambling winnings?

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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.

Casino Winnings Tax In India

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

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

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.

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.

Bottom 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.

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.

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When you gamble, you’re probably only focused on winning in the moment. You don’t think about what the government might take off the top of your wins.

Of course, the US federal government always wants a cut. It demands 24% of your winnings through federal taxes.

However, states vary on how they tax gambling income. Some are much worse than others due to their high rates.

Casino Winning Tax Laws

Casino Gambling Taxes by State

The following guide covers seven states that want a big chunk of your winnings. It also discusses common questions and topics regarding gambling and taxes.

California:

The California casino scene is a thriving land-based gambling industry. It offers 62 tribal casinos, 88 card rooms, and over a dozen horse tracks.

That said, California is definitely a good vacation spot due to its weather and numerous gaming options. But you might take pause on visiting here when considering the extreme tax rate.

California taxes gambling wins as normal income. It collects anywhere from 1% to 13.3% of your winnings. The 13.3% is the highest state tax rate in the US.

Iowa:

Iowa boasts casinos, poker rooms, and sports betting. It charges a 5% flat tax on winnings earned in the Hawkeye State.

Minnesota:

Minnesota offers a wide range of charity gambling establishments and a lottery. The Gopher State may not provide massive Vegas-style resorts, but it does give you some options.

It taxes gambling according to four income brackets (based on married people’s income):

1. 35% ($0 to $39,410 annually)
2. 05% ($39,410 to $156,570)
3. 85% ($156,760 to $273,470)
4. 85% ($273,470 and above)

You’ll likely fall into the 5.35% bracket if you do profit through gambling. But if you win really big, you’ll need to deal with the large 9.85% rate.

New York:

Gambling in New York has grown within the past decade. Its Expanded Gaming Act has added commercial casinos on top of the existing tribal establishments.

You can also enjoy lotteries and poker here too. Assuming you win, though, then you must ante up between 4% and 8.82% for state taxes.

Oregon:

The Beaver State offers lotteries, charity gaming, horse racing, and tribal casinos. It provides more than enough gambling options for its 4.22 million residents.

Oregon doesn’t worry about taxing wins worth less than $600. However, it does impose an 8% tax on winnings worth over $600.

Vermont:

Vermont features a unique tax structure that varies based on your winnings. You’ll pay a 6.72% rate on wins worth less than $5,000, and 6% on wins worth over $5,000.

Wisconsin:

Wisconsin features 22 tribal casinos and lotteries. The Cheese State requires up to 7.65% in taxes on gambling winnings.

Should You Avoid States With High Gambling Taxes?

You don’t necessarily need to avoid states with high gambling taxes—especially when you’re interested in a certain casino or sportsbook. However, you should keep this matter in the back of your mind.

Of course, you also want to take other factors into account besides taxes. Here are aspects to think about when determining what state you’ll gamble in:

• Convenience/distance – You don’t want to drive for hours just to avoid gambling taxes.
• Quality of gambling venues – Playing at the best casinos/poker rooms/sportsbooks can make dealing with high stakes worthwhile.
• Availability of regulated online gambling – You may be focused on using legal online casinos and betting sites above all.
• Your preferred stakes – You probably don’t need to worry much about higher taxes if you’re just playing quarter slots or $5 blackjack.

What If You Don’t Live in the State Where You Win?

Gambling over state lines causes confusion on where to pay taxes. Do you pay your home state or the one where you win?

Typically, you cover taxes in the state where the winnings occur. Your home state, meanwhile, will give you a tax credit for whatever is paid to the other state.

Casino Winning Tax Form

Here’s an example:

• You live in Oregon near the California border.
• You cross the border and buy a lottery ticket at a CA gas station.
• You win a $1 million prize.
• As per California’s tax laws, the $1 million payout is subject to the highest 13.3% rate.
• You pay $133,000 to the Golden State.
• Oregon only features an 8% tax rate on large gambling wins.
• Therefore, you owe nothing to the Beaver State.

Don’t Forget Federal Taxes

Some states don’t require you to pay any taxes on gambling winnings. These states include:

• Alaska
• Delaware
• Florida
• Nevada
• New Hampshire

• South Dakota
• Texas
• Washington
• Wyoming

You must pay federal taxes on wins no matter what—even if you live in a state with no gambling taxes. Again, Uncle Sam wants 24% of your winnings.

This percentage is already significant. It becomes even more noteworthy in a state like California, where you could pay up to a 37.3% total tax (24 + 13.3).

You report gambling wins under the “other income” on Form 1040. The government expects you to report winnings even if you earn just $1.

Of course, you can almost assuredly get away without reporting a tiny payout. However, a gambling establishment requires you to fill out a W-2G form on big prizes.

Casinos, poker venues, and sportsbook issue W-2G’s under the following circumstances:

• $600 and above for horse gambling and sports betting wins worth 300x your stake (e.g. $3,000 win / $10 bet = 300x).
• $1,200 and above for slots and video poker wins.
• $1,500 and above for keno wins.
• $5,000 and above for poker-tournament wins.

Remember to Deduct Your Casino Losses

The IRS wants you to report all gambling winnings under any circumstance. State governments that tax gambling payouts expect the same.

However, you can deduct any losses incurred as well. You itemize deductions in a different section of your tax form than where the other income is reported.

Your deduction will be subtracted from whatever you win. Here’s an example:

• You win $4,000 at a casino.
• You lose $3,000 while winning this amount.
• You must report the full $4,000 under “other income.”
• The $3,000 goes under itemized deductions.
• $4,000 – $3,000 = $1,000.
• You’d pay the relevant tax rate on $1k.

More on Itemized Deductions

Itemized deductions constitute expenses that you spend to win money. They differ from a standard deduction, which is basically a lumpsum that’s subtracted from your income.

Standard deductions are easier to deal with. Unfortunately, you must use the itemized variety when concerning gambling.

If you’re an amateur gambler, meals, hotel stays, entertaining, and gas/plane tickets don’t count as deductions. You must be a professional gambler to deduct items like these. Instead, you can only count what you spend on gambling.

Casino Winnings Tax Limit

Keep Casino Gambling Records

You should keep track of your gambling winnings and casino bankroll as best you can. This way, you have evidence just in case the IRS audits you.

When keeping records, you want plenty of information. Here’s an example of five important things you can jot down in your records:

1. Type of gambling/game
2. Date of gambling session
3. Location of the sportsbook/poker room/casino
4. Bankroll at the start of the session
5. Bankroll at the end of the session

In addition to tracking this info, you should also hold onto other documents that you receive. Bank statements, betting tickets, check copies, and W-2G forms are examples of documentation.

What If You Don’t Pay Taxes on Gambling Winnings?

You may be tempted to avoid reporting winnings from gambling—especially if the money is insignificant. You’ll likely get away with doing so provided you haven’t won big enough to receive a W-2G form.

Of course, I don’t advise failing to report gambling winnings. But you definitely don’t want to avoid reporting wins after receiving a W-2G.

A gambling establishment sends a W-2G copy to the IRS. The latter can easily check this information with their software.

Casino Winnings Tax Philippines

If the IRS catches you not reporting taxes, they’ll probably just send a letter and fine you. However, they can take further action if you refuse to cover the taxes.

Conclusion

Claiming gambling winnings on your taxes varies greatly from one state to the next. Some don’t charge you a dime while others level a large amount.

Of course, you may not really care about the state tax beforehand. If you do win, though, you’ll feel the sting in a state with a high tax rate.

You don’t necessarily need to drive hours away just to avoid high taxes on winnings. However, you might consider taxes if you live near the border of two or more states.

California, Minnesota, New York, Oregon, and Wisconsin are currently the five places with the highest rates. If possible, you should avoid these states when gambling for mid or high stakes.