What You Need to Know About Casino Winning Taxes

[Betting Forum]

As the bells and lights of slot machines blur into the background cacophony of the casino floor, you watch the roulette wheel spin round and round until finally the little white ball falls into place. You’ve hit the jackpot! But before getting carried away with dreams of how you’ll spend your sudden windfall, it’s important to understand the tax implications of significant gambling winnings at EvolveCasino. While it may seem like found money, Uncle Sam still expects his cut.

Tax Withholding on Jackpot Winnings​

If you strike it big and win a jackpot of $1,200 or more from a single slot machine spin or video poker hand, the casino will withhold taxes before paying out your prize. The amount withheld depends on how much you won:

• $1,200 to $9,999 - Casino withholds 24%
• $10,000 or more - Casino withholds 27%

So if you hit a $5,000 jackpot, you would receive around $3,800 after tax withholding. The casino will provide you with a Form W-2G detailing your winnings and taxes withheld.

Reporting Requirements for Gambling Winnings​

You must report all gambling winnings on your federal tax return, regardless of whether taxes were withheld or not. Any winnings from slot machines, table games, sports betting, horse racing, lotteries, raffles and other wagers must be included in your reportable income.

• $600 or more - Casinos and other gambling operators must issue you a Form W-2G detailing your winnings, which is also sent to the IRS.
• Under $600 - No W-2G is issued but you still must self-report these smaller winnings as “Other Income” on Form 1040.

Failing to report gambling income or filing an inaccurate return can lead to tax fraud charges, penalties, interest and audit scrutiny.

Calculating Your Casino Tax Liability​

In most cases, gambling winnings are subject to the top federal income tax rate of 37% for 2022. Your specific tax owed will depend on your total annual income and income bracket:

• 24% - If your total taxable income for 2022 falls under $170,050 as a married joint filer or $89,075 filing single.
• 35% - Taxable income from $170,050 to $340,100 joint or $89,075 to $170,050 single.
• 37% - Taxable income above $340,100 joint or $170,050 single.

In addition, you may owe state taxes on gambling income of 5-8% in most jurisdictions.
Some good news - if the casino withheld taxes when you first won, that amount offsets part of what you owe. You can also deduct gambling losses to offset winnings and reduce tax liability, provided you have the documentation.

5 Tax Tips for Casino Winnings​

Follow these tips to make sure you don’t end up owing the IRS after a lucky gambling streak:

1. Keep detailed records - Save losing tickets, statements showing casino losses and other documentation.
2. Itemize deductions - Itemizing allows you to deduct gambling losses up to the amount of your winnings.
3. Don’t avoid reporting - Even if losses exceed winnings, you still must report all winnings over $600.
4. Consider state taxes - Some states like California don’t tax gambling income while others have unique rules.
5. Consult a tax pro - CPAs and EAs can help you navigate gambling taxes and identify additional deductions.

While that big jackpot gives an adrenaline rush, the euphoria is temporary if you end up with a big tax bill. Follow these tips when the house wins to avoid financial heartache down the road.