How Are Gambling Winnings Taxed?
Most people don’t think about taxes on their way to the casino. But what might seem like nothing more than a fun night in Las Vegas actually carries significant tax consequences if you win. As is often the case, the federal and state governments single out casino winnings for unique taxes of their own. Failure to properly report your haul can result in serious penalties and headaches you just don’t want.
Follow these rules to stay on the safe side:
How Much You Win Matters
Gamblers are lucky in that casino taxes are not progressive like income taxes are. That is, you will owe the same percentage to the IRS on a $100,000 jackpot as a $10,000 one. Yet it’s important to know the thresholds that require
reporting. As Bankrate.com explains. winnings in the following amounts must be reported:
- $600 or more at a horse track (if that is 300 times your bet)
- $1,200 or more at a slow machine or bingo game
- $1,500 or more in keno winnings
- $5,000 or more in poker tournament winnings
All of these require giving the payer your Social Security number, as well as filling out IRS Form W2-G to report the full amount won. In most cases, the casino will take 25 percent off your winnings for the IRS before even paying you. Don’t get any crafty ideas about cutting Uncle Sam out of the transaction, either. According to Bankrate, this entitles the casino to withhold up to 28 percent of your winnings.Source: blog.turbotax.intuit.com