• Gambling Winnings Tax Form
• Minnesota Tax On Gambling Winnings
• Does Oklahoma Tax Gambling Winnings
• Federal Gambling Winnings Tax Rate
• Turbo Tax Gambling Winnings

01.28.20

Have you had winnings from visiting a casino, betting on horse races, sports wagering, purchased lottery tickets, or received a prize from a raffle lately? You are planning on claiming your winnings/fair market value of the prize on your personal tax return and paying your share of taxes right?

• Withholding on Gambling Winnings. Gambling winnings are subject to withholding for federal income tax at a rate of 24% as of 2020 if you win more than $5,000 from sweepstakes, wagering pools, lotteries, or other wagering transactions, or anytime the winnings are at least 300 times the amount wagered.
• Gambling Winnings Gambling winnings are subject to federal and Minnesota income taxes. This includes winnings from the Minnesota State Lottery and other lotteries. You’re responsible to report and pay income tax on all prizes and winnings, even if you did not receive a federal Form W-2G.

Nonprofessional gamblers report winnings as “other income” on line 21 of their tax returns. Gambling losses are deductible only to the extent of gambling winnings and are reported as itemized deductions on Schedule A that are not subject to the 2%-of-adjusted-gross-income threshold; therefore, deductions for gambling losses are not among the miscellaneous itemized deductions suspended.

All of these items are gambling winnings and are fully taxable even if you are a casual gambler. The IRS requires you to report the full amount of your gambling winnings on your personal tax return on Schedule 1, line 21. Gambling losses can be deducted but only to the extent of your gambling income. However, the losses don't get directly offset against the gambling income. You must itemize your deductions to deduct your gambling losses as they get reported on Schedule A, line 16 as 'other itemized deductions.'

Don't roll the dice with the IRS! Remember, all gambling winnings must be reported as taxable income so just don't report gambling income reported on a W-2G (certain gambling winnings) tax forms. The IRS is finding ways to track your unreported gambling income, in particular with sports betting as there now is a trail via apps on your phone, so be sure you report it and pay your share of taxes. If you choose not to track and report your gambling income and losses, you are putting yourself at risk to be subject to interest and penalties or you could be missing out on tax-saving opportunities.

So don't spend all of your gambling winnings as the IRS wants their share too!

It’s Preakness Week in Maryland. Just Remember: Big Winners Owe Taxes!

Baltimore’s Pimlico Race Course hosts the second leg of the Triple Crown this week. If you are lucky at the track, pick the winner, and win big, you must pay taxes.

Gambling Winners Can Owe Federal and State Taxes

In most cases, the IRS considers money or items you win by gambling to be taxable income. If you win items, you must report the fair market value of the items you win.

The IRS defines gambling winnings as including, but not limited to money or items gained by:

• Horse track betting
• Dog track betting
• Off-track betting
• Casino games
• Poker tournaments
• Lotteries
• Raffles
• Sweepstakes
• And, even Bingo

Federal and local state (Maryland and Virginia) tax regulations require gambling winners to report their winnings on their tax returns.

What’s the Tax Rate on Gambling Winnings?

The IRS considers gambling winnings taxable. If you win a large sum ($5,000+ or 300 times the amount bet), the gambling establishment will generally deduct 25% from your winnings at the time of payout.

When gambling establishments deduct taxes from large winners, they provide the IRS Form W-2G to the winners and to the IRS. This form details the winnings and the deduction.

If you win at casino games, Bingo or Keno, your winnings are not typically subject to withholding. However, your winnings could be subject to underpayment penalties if you do not pay estimated taxes on time.

If you win a large item (such as a car or a trip), you are responsible for paying the fair market value of the prize.

Maryland Taxes on Gambling Winners

If you win $500+ at the Preakness or at any Maryland-based gambling or gaming establishment, you will owe taxes. Maryland’s gambling taxes apply to residents and non-residents.

If you win big ($5,000+), the gambling establishment will automatically withhold the taxes from your payout check.

Maryland requires all winners of more than $500 to file Maryland Form 502D within 60 days of the time you receive the prize money.

Virginia also Taxes Gambling Winnings

Gambling Winnings Tax Form

If you live in Virginia, travel to the Preakness, and win big, you will also owe Virginia taxes. Virginia taxes all gambling winnings over $600 at the state’s tax rate. You will owe Virginia taxes on your winnings even if you also paid taxes to Maryland. Yes, that is double taxation.

What About Gambling Losses?

You will not be able to deduct losses directly from the winnings at the time of payout. If you have gambling losses, you can deduct those loses as a miscellaneous deduction on line 28 of Schedule A, Form 1040. You can only deduct gambling losses if you itemize your deductions. You cannot deduct losses greater than your winnings.

Records You Should Keep

Minnesota Tax On Gambling Winnings

If you gamble often (but not professionally), you should keep records on your gambling winnings and losses in a log. You should record details such as:

• Date/description/location of the event
• Amount bet/ amount won
• Names of others with you at the time of the event

You should also keep any relevant documents (tickets, payout slips, and relevant forms, such as Form W-2G). You will need to document winnings and losses in order to deduct your losses on your income tax.

Does Oklahoma Tax Gambling Winnings

Professional gamblers have more expenses that are allowable. The IRS defines a professional gambler as someone who gambles on a regular and continuous basis. Professional gamblers report expenses (travel, hotel rooms, etc.) on Schedule C, the IRS Form for income from a trade or business. As with amateur gamblers, the pros cannot deduct expenses greater than their winnings.

Federal Gambling Winnings Tax Rate

If you go to the Preakness, have fun and if you win big and need tax help, let us know.

Turbo Tax Gambling Winnings