Imagine walking through the casino floor and hearing those large numbers flash, signaling your big win. Perhaps it was hitting sevens in your slot machine window that has unlocked it all – your winning dreams may now come true; your new car, vacation and home could soon be within your grasp – although paying off debts or affording luxury lifestyle won’t come as easily due to taxes being due as soon as well!
No matter if it be online gambling or at an in-person casino, the IRS requires all gambling winnings to be reported and declared under “Other Income” on your 1040 tax form. Any winnings exceeding $1200 should be subject to taxation – such as cash winnings from slot machines as well as bingo, keno or poker wins.
Any winnings exceeding $1,200 must typically be reported to the IRS, regardless of where or how you play them. This includes lottery tickets, blackjack and other table games as well as horse racing, sports betting and any other forms of gambling.
Most casinos must issue a W2G form for any winnings that exceed $1,200, including jackpot wins on slot machines or prizes from casino games. The percentage withheld from winnings often depends on what form of gambling was conducted as well as your ratio between wager and winnings.
Whenever a jackpot win on a slot machine occurs, casinos are required by federal tax regulations to withhold 28 percent for federal taxes from winnings over $5,000. This requirement comes directly from the IRS Information Reporting requirements; as per casino practice and depending on state legislation or policy this may or may not occur.
Keep track of your winnings and losses during the year to help determine your tax liability. Gambling losses can be deducted as itemized deductions on your tax return; however, any amounts actually won cannot. If you experience more losses than winnings at once, however, then chances are your tax bill will be relatively small; especially if you fall in the lowest tax bracket. However, for advice specific to your individual circumstances it would be advisable to speak to a licensed professional about how best to approach gambling taxes.