Landing a big win at a land-based casino, or winning big through online sports betting is a great feeling. But no matter how much you win, you still need to report it.
Working out how much you owe in gambling tax can be a headache to work out. Luckily for you, we have put together this very simple, easy-to-use, free gambling winnings tax calculator.
Sports betting online or through a sports betting app can make life a bit easier as you can see all your activity in your account. The same goes if you are playing at an online casino. It’s easier to keep track of your winnings and losses.
Select your state on the calculator below, select your relationship status, add in your taxable income, enter the amount you won and press calculate. This will display 2 figures, the tax paid on your gambling winnings, and the amount you can keep from your gambling winnings.
Gambling winnings are considered taxable income by the IRS and you should always consult a professional when submitting any tax returns. A great idea to make life easier is to keep a spreadsheet for all your gambling activity. This can be used to track all your winnings and losses. You are required by law, that all gambling winnings must be reported on your federal income tax returns.
Our tax calculator can be accessed and used free in any state and is great to use in the more popular gambling states like NJ, NY, TN, VA, NV, MI, PA, IN, and CO.
For several people, gambling can mean regularly betting on sports to buying the occasional lottery ticket. However, no matter what you do, there are always winners and losers, and there is always a gambling tax associated with any form of gambling. For example, there is a casino tax when you visit your local casino. Casino tax rates also vary depending on which state you are in. According to the Internal Revenue Service (IRS), any money you win from gambling or wagering is taxable income, according to the Internal Revenue Service (IRS). Not reporting gambling winnings could lead to legal action. So, gambling and taxes in the United States go hand in hand.
Additionally, it is essential to know that gambling income doesn’t just come from traditional card games and casinos. Betting tax is applied to winnings generated from lotteries, game shows, and racetracks. There are specific rules that apply to taxable gambling winnings, and there are strict recordkeeping requirements. However, the good news is that you may be able to deduct gambling losses. Any gambling losses are typically reported on Form W-2G for certain gambling winnings.
There is a W-2G threshold which is shown on the W-2 G form to report your gambling winnings and losses.
One of the most straightforward ways to find out how much taxes do you pay on gambling winnings is to use a gambling winnings calculator. Bettors are typically unsure of the federal gambling tax rate in their state and how it equates to any money they may make via sports betting or other wagering types. Our free-to-use gambling winnings tax calculator at the top of this page is ideal if you want to work out the tax rate on gambling winnings.
If you want to read more about how gambling income affects your taxes, you will discover more information on this page. If you are ever worried about filing your tax return and are unsure how to report your winnings and losses, the following info will be useful, but you should always seek professional advice.
You Must Always Report Your Winnings
The golden rule is that you must report all winnings. It doesn’t matter if another entity reports them to the government or not. For example, if you strike lucky in the Kentucky Derby and a big Parlay bet comes in, you must report the winnings as income.
Another crucial rule is that you cannot subtract the cost of gambling from your winnings. If we imagine you are betting on horse racing and you win $620 from a horse race, but it cost you $20 to bet, the total taxable winnings are $620, not $600.
It is not just purely cash winnings that you are required to report. If you win a new TV in a raffle, this also counts as income. You, therefore, have to claim the item’s fair market value at the time it was won. This would usually be the amount you would have to pay for the item if you bought it new. You could always use our taxes on the winnings calculator if you are unsure.
Taxable Gambling Income
All gambling income is very likely to be taxable income. As we mentioned above, this includes cash and the fair market value of any item you win. The law states that gambling winners must report all of their winnings on their federal income tax return. Depending on how much you win, you may receive one or more Form W-2G. This reveals the amount of your winnings and the amount of tax that was withheld, if any.
Even if you do not receive a Form W-2G, you are still required to report all gambling winnings on your return. If you are confused by the numbers or are about to file your tax return, use the gambling tax calculator above. This can act as a sports gambling tax calculator or lottery tax calculator, depending on which type of wagering you have engaged in.
Gambling winnings include money and prizes earned from the following:
- Slot Machines
- Sports Betting
- Casino games
- Poker Tournaments
- Betting Pools
- Off-track betting
- Horse & Dog Racing
- Lotteries (lottery winnings)
Please note that any winnings generated from slot machines, bingo, and keno may not be subject to tax withholding if specific circumstances are met—those being that the winnings may need to be provided with a social security number.
If you receive any gambling winnings that are not subject to tax withholding, you might have to pay estimated tax. Gambling winnings are typically subject to a flat 24% tax. However, for the activities listed below, winnings over $5,000 will be subject to income tax withholding:
- Any lottery, sweepstakes, or betting pool
- Any other bet if the proceeds are equal to or greater than 300 times the wager amount.
If you win a prize that does involve cash, such as a VIP weekend away, you will need to pay taxes on the fair value market value for each individual prize. Depending on the amount you win, and the type of gambling you have participated in, the payer or the establishment may be required to withhold income taxes.
Generally, around 24% of the amount is required to be withheld. There may be cases where a backup withholding of 24% is required instead. If you come across an instance where tax is withheld from your gambling winnings, you will receive a W2-G form from the payer.
You Can Deduct Your Gambling Losses
You are permitted to deduct gambling losses if you itemize your deductions. Anybody can deduct their losses only up to the amount of their total gambling winnings. You must always report your winnings and losses separately, rather than doing it on one document and reporting a net amount.
Gambling losses are deducted on Schedule A and recorded as a miscellaneous deduction. This is not subject to a 2% limit. Consequently, you can deduct all losses up to the amount of your winnings and not just the amount over 2% of your adjusted total income.
For example, if you won $2000 but lost $5,000, your itemized deduction is limited to $2,000. You are not able to use the remaining $3,000 to reduce your other taxable income.
You may be wondering if the rules on gambling tax change if you don’t just gamble recreationally but do it as a living? Unfortunately, there is no straight answer. Deductions from losses that go above your winnings are still prohibited. In 1987 the US Supreme Court ruled in the case of Commissioner vs. Groetzinger that deductions for losses cannot go above the income from winnings.
If you actively take part in gambling with the intention of making a profit, then effectively, it becomes your job. Consequently, instead of claiming your winnings as “other income” on your Form 1040, you can opt to file Schedule C as a self-employed individual.
This is a vital distinction because you can deduct your other costs of doing business on Schedule C. This means you are reducing your taxable income. You could deduct the costs of the following:
- Internet costs if you bet online.
- Literature that relates to your gambling profession.
- Travel expenses and food and drink costs if you attend tournaments.
The significant drawback of turning pro is that you’ll have to pay self-employment tax on your winnings.
The IRS states that you must keep detailed records of your gambling winnings and losses in addition to any related documents. These documents include tickets, payment slips, Form W-2G, statements, and receipts. All bettors must be able to prove both their winnings and losses if they want to deduct their losses. The IRS guidance suggests that it would be sensible to keep a gambling log.
The IRS mandates that you have the following information about each gambling win and loss:
- Type of gambling activity
- Name and address of the event
- Names of other people there when you placed the bet
- Amounts of winnings and losses
It would be wise to get into the habit of recording all gambling activities you participate in during each financial year.
Useful sites and resources:
We have a number of handy tools and sports betting guides on our site to help you get the most from your online gambling. You may also want to check out our other calculators:
How much can you win in a casino without paying taxes?
The most you can win at a licensed casino without paying taxes is $600 except winnings from slot machines, keno, and poker tournaments if the amount is at least 300 times your bet. This equates to $1,500 or more in keno winnings, $5,000 or more in a poker tournament, and $1,200 or more from a slot machine.
How much taxes do you pay on slot machine winnings?
Typically, if you win more than $5,000 on a wager and the payout is at least 300 times the amount of your bet, the IRS states the player must withhold 24% of your winnings for income taxes. This includes winnings on slot machines.
What happens if I don’t report my gambling winnings?
A lot of this depends on how much you have failed to report. However, you must always report all of your gambling winnings. Failure to do so will result in legal action, which will be more severe if you fail to report a large amount, usually over $1,200.