Are Gambling Winnings Taxable in the US?
It’s an unfortunate truth that you have to pay taxes on almost everything including gambling winnings. So, if you want to avoid a visit from the IRS, then we’ve got the perfect guide for you.
Any windfalls you land on table games, slots, or the lottery, are subject to federal income taxes and those of the state. But the amount you pay will depend on how much you win and where you managed to win it.
How Are Gambling Winnings Taxed?
You will have to report your winnings as “Other Income” on the IRS Form 1040 as taxable income. This includes any winnings that aren’t reported on Form W-2G, and you’ll have to pay an estimated tax of 24% (flat rate).
As for gambling losses, you can itemize your deductions and keep a record of all wins and losses. You can’t deduct your gambling losses as more than you reported on your return. But you can claim losses up to the amount of winnings as “Other Itemized Deductions”.
Your gambling winnings include, but aren’t limited to:
- Slot Machines
- Poker Tournaments
- Sports Betting Pools
- Game Shows
- Off-Track Betting
However, if you’re a professional gambler, the rules change as it’s considered your regular income, and you’ll pay standard deductions. As a self-employed person, you’ll report your gambling income on Schedule C and add your tax return based on the information you provide.
State Gambling Tax
Aside from the federal taxes, you’ll pay taxes to the state where you’re gambling as well. If you’re at a land-based casino or playing the lottery, you can fill out the forms and report it to the IRS immediately when you claim your winnings.
But on online gambling activities, you’re going to have to look up what your state laws are and file your taxes accordingly.