In most cases, all income must be reported to the IRS in the United States. That includes gambling winnings, whether won online or in person. We recommend that gamblers keep a careful log of how much they gamble away and how much they win to accurately report the figures come tax day. The last thing you want to do is gamble on whether or not the IRS will come after you.
DISCLAIMER: No one on the Bonus.com team is a tax professional. Instead, we are gambling experts who have had to pay tax on casino winnings ourselves. This is a general guide to get you up to speed, but gambling taxes vary by state, income level, and several other factors. Consult with a certified accountant or other tax preparation professional to ensure compliance with tax law.
Gambling Tax Documents
At legal US online casinos, gambling winnings of $600 or more will trigger an automatic W2-G or 1099 form to help a player report the winnings to the IRS. However, all gambling winnings must be reported, whether they have triggered an IRS form or not.
The two most common tax documents you’ll come across when reporting gambling winnings are the W2-G and the Form 1099. In most cases, you’ll receive a W2-G; however, some operators do issue 1099 forms in certain situations.
Form W2-G For Big Wins
If you hit a big win, most gambling establishments will automatically give you a W2-G tax form. The threshold for receiving a Form W2-G varies based on the type of gambling and the amount you won. Here are the thresholds:
- Sports betting and fantasy sports (DFS included): $600
- Bingo and slot machines: $1,200
- Keno: $1,500
- Poker tournaments: $5,000
Table games (blackjack, craps, sic bo, baccarat, etc.) are exempt from Form W2-G rules. You still need to report your winnings, but you won’t receive a special form.
Lottery winnings are absent from this list because the tax codes surrounding Powerball or other big lotto prizes can get more complex. If you win big on a lottery game, it’s best to get in touch with an accountant or tax service to assist you.
Online Sports Betting Wins: Form 1099
Sports bettors may receive the IRS Form 1099. When you win more than $600 on a sportsbook site, the operator is required to send you a Form 1099-MISC. If you cash out those winnings with PayPal, you’ll get a Form 1099-K instead. Either way, this form helps you easily include your winnings with your yearly tax return. While W2-G forms are most commonly issued for gambling winnings, 1099 forms may also cover tax requirements as they are essentially utilized for “miscellaneous income.”
Once again, remember that you’re still obligated to report your winnings even if you don’t receive a form from the sportsbook where you won money. They are only required to send you the form if you win more than $600. Winnings below that are still taxable; you just need to report them on your own.
Gambling Tax Documents By State
Below, we’ve put together a list of important links regarding gambling taxes and documents for each state that offers legal online gambling. We’ve also included important information, such as the state tax rate on gambling winnings (keep in mind that this is in addition to a federal 24% tax).
- State Tax on Gambling Winnings: 3%
- Arkansas Department of Finance and Administration Website
- Arkansas Taxes Website
- State Tax on Gambling Winnings: 3% – 6.99%
- Connecticut Gaming Division Website
- Connecticut Department of Revenue Services Website
- State Tax on Gambling Winnings: N/A
- New Hampshire Lottery Website
- New Hampshire Department of Revenue Administration Website
- State Tax on Gambling Winnings: 4.5% – 10.9%
- New York Gaming Board Website
- New York Department of Taxation and Finance Website
- State Tax on Gambling Winnings: 8%
- Oregon State Police Gaming Enforcement Division Website
- Oregon Department of Revenue Website
- State Tax on Gambling Winnings: 5.99%
- Rhode Island Department of Business Regulation Website
- Rhode Island Department of Revenue Website
- State Tax on Gambling Winnings: N/A
- Tennessee Sports Wagering Advisory Council Website
- Tennessee Department of Revenue Website
Gambling Tax Tips
Don’t Wait for a Form
Many players believe that they only need to report their gambling winnings if they are issued a W2-G or 1099, but this is not true. All gambling winnings, even if they are below the threshold to trigger these forms, must be reported.
Keep Track of your Winnings
Now that you know the first gambling tax tip, this one should go without saying. Make it easier on yourself and track your winnings as they occur. Nobody likes having to rush around to dig up information in the heart of tax season.
Gambling losses can be deducted to a certain extent, and if you want to make the most of your taxes, you should absolutely take advantage of this. However, keep in mind that in order to claim gambling losses, you must file them itemized, so you won’t be able to take the standard deduction. In addition, players are only allowed to deduct losses up to the amount of winnings claimed. For example, if you win $1,000 but lose $2,000, you can only claim up to $1,000 of losses.
File Schedule C if You’re a Professional Gambler
If you are a professional gambler, you should file Schedule C as self-employed rather than relying on W2-G and 1099 forms. This opens up possibilities for deductions beyond your losses up to the amount of winnings, as mentioned in the previous tip. These further deductions may include internet costs for online wagering or travel expenses if you attend tournaments, etc.
Include Non-Cash Prizes
If you win a non-cash prize through a promotion, for example, this also must be included in your reported winnings. Almost every promotion or non-cash prize giveaway held in the gambling world will include an item value in the terms and conditions, and this is what you must report.
Always Report Winnings
Last but not least, always report all of your winnings. It may seem like a drag in the moment, but it’s much worse to leave yourself hanging out to dry if/when the IRS comes knocking for an audit.
Here are more online casino tips for new players.