What is Gambling Income?

IRS Link to W2-G Form — Found Here
IRS Link to Form 1040 — Found Here

Winnings from gambling activity must be reported as income, and they will be subject to different kinds of taxes depending on how they were won and the amount.

If you win over a certain amount through a lottery, raffle, horse track, keno game, slot machine, poker tournament, or other form of gambling, it will all be taxed at a 25% rate and will have to file form W2-G. Lesser winnings will still need to be reported as income. If an individual wins over $600, less the amount of the wager, and it is over 300 times the amount of the bet, they must file a W2-G on their taxes.

For Keno, slots, and poker tournaments, there are different limits ($1,200; $1,500; $5,000, respectively) which do not have to be reported on a W2-G but still have to be reported. The earnings on W2-G will all be taxed at a 25% rate, regardless of how much was won, so this can be good or bad, depending on the taxes that would have been paid otherwise.

The casino, track, or lottery will generally withhold the 25% on behalf of the gambler and send it to the IRS. For all other gambling earnings, it should be reported as income regardless of the amount.

If someone keeps up with documentation regarding their losses as well, and they find that it would work better to itemize than to take the standard deduction, they can file a 1040 with details.

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