Every gambler loves to win when playing in online casinos or sportsbooks. But reporting these winnings is another story entirely. Determining how much you need to pay in gambling taxes can be tricky, especially if you hate filing your taxes. Fortunately, our specialists have put together this free gambling winnings tax calculator for your winnings.
Using the gambling tax calculator is very easy. Simply choose your state on the calculator, input your relationship status, taxable income, winnings and click calculate. This will then show you a result consisting of two figures:
- The taxes you need to pay on your gambling winnings
- The amount that’s yours to keep from your gambling winnings
Note: Our tax calculator assumed a standard $12,400 deduction for single individuals and $24,800 for married individuals. It also does not add any local/municipal taxes.
Gambling winnings are considered taxable income by the IRS, and you must reach out to a specialist when filing tax returns. To make your life easier, we recommend you use a spreadsheet to keep tabs on your gambling activities. This will ensure you don’t miss out on your winnings and losses. The law requires you to report your gambling winnings on your federal income tax returns.
You can access our tax calculator and use it for free in any state. We recommend it as an option in states where gambling is more popular, like NY, NJ, TN, CO, IN, PA, KS, and MI. You can use this tool as a lottery tax calculator or your winnings tax calculator 2023.
For numerous individuals, gambling can mean frequently betting on slots or playing on sports sites. However, regardless of the option you choose, it is either you win or lose. And for every form of gambling, there is always a tax to be filled. If you head to a physical casino, a casino tax will be involved. The tax rates tend to vary depending on the state you are situated in. For instance, in New Jersey, the gambling win tax rate is 3%, while it is 3.07% in Pennsylvania.
According to the IRS or Internal Revenue Service, any money you win from wagering or gambling is taxable income. You’ll be subject to legal action if you fail to report your gambling winnings. This means that gambling and federal taxes go alongside each other in the US.
Also, it is essential to note that gambling income is not only from typical casino games or betting on sports sites. Betting taxes also apply to betting winnings from game shows, lotteries, and racetracks. Taxable gamble winnings come with numerous rules, including proper recordkeeping requirements. Still, there is good news. You might be able to deduct gambling losses. To do this, you’ll need to report them on Form W-2G for specific gambling winnings.
All these can be complex for you to handle alone, but a gambling winnings calculator can quickly help you determine your gambling taxes anytime you win. Most bettors are typically uncertain of the state’s federal gambling tax rate and how it affects their earnings from betting on online casinos, sportsbooks, or other gambling activities. Fortunately, with our free gambling winnings tax calculator above, you can work these out seamlessly.
If you are unaware of how your earnings from gambling affect your marginal tax rate and want to learn more, then you are on the right page. This guide will show you everything you need to know about filing your gambling tax returns and how to go about it. However, while this information may be ideal for covering the basics, we recommend you still seek help from a tax professional.
Your Earnings Must Always Be Reported
One rule when filing your gambling taxes is that all your winnings must be reported. This is the case regardless of whether the casino reports them to the government. For instance, you must report the winnings as income if you land a huge jackpot playing Mega Jackpots.
Another vital thing to note is that you can’t deduct the amount you used to gamble from your winnings. For instance, if you wager $100 on Chelsea to win a match, and you win $2000, your total taxable winnings are $2,100 instead of $2,000.
Asides from cash winnings, you are required to report other forms of gambling winnings. For instance, presuming you win a new car for spinning the wheels of a game, this is also categorized as income. You’ll therefore need to determine the car’s fair market value when you won it. This is typically the amount you’ll pay if you had bought the car yourself brand new. If you are uncertain how to determine this figure, you can use our gambling winnings calculator.
What type of Gambling Income is Taxable?
Every form of gambling income will probably be categorized as gambling income. As we stated earlier, this consists of cash winnings and fair value of gifts/items you win. According to the law, gamblers must report gambling winnings on their federal income tax return. The number of W-2G forms you receive depends on your winnings. This could be one or more, and it indicates the amount of winnings you get alongside withheld tax if any.
Even when you don’t get a Form W-2G, the law still requires you to report all your gambling winnings. You can use our gambling tax calculator above if you don’t know the figures to input when filing your returns. The calculator is versatile and can work as a sports gambling tax calculator or online casino gambling tax calculator – depending on where you wager.
Gambling winnings consist of prizes and cash you win from the following:
- Online slots
- Casino games
- Sports betting
- Poker Tournaments
- Betting Pools
- Horse and Dog Racing
Note that winnings you get from bingo, online slots, and keno may not be applicable for tax withholding if you meet specific circumstances. One of these is that your earnings must be provided alongside a social security number.
If you get any gambling winnings that aren’t subject to tax withholding, there is a huge chance that you need to pay the estimated tax. In most cases, gambling winnings attract a flat tax range of 24%. However, income tax withholding will be subject to more than $5,000 on any activities below.
- Any betting pool, sweepstakes, or lottery
- Any other wager where the winnings are equal to or over 300 times the bet amount
If you earn prizes that don’t involve physical cash, like exotic trips as a VIP player, you will have to determine the fair market value of each prize and pay taxes. Depending on the form of gambling activity, or the amount of cash you earn, you or the establishment may have to withhold income taxes.
Typically, only about 24% of the cash needs to be withheld. There may be a 24% withholding tax in some instances. If you are in a situation where tax is withheld from your gambling earnings, the payer will provide you with a W2-G.
What do do if you don’t receive a W-2G Form?
First, we must stress that not only are you required to submit the w-2G forms, but it is also in your best interests to do so. Bear in mind that cash was withheld from your gambling winnings initially. If you don’t receive your W-2G forms or there is some information missing, be sure to contact the operator that has failed to send this and make sure you get everything and then submit the forms. For example, if you get a big win from a parlay on the BetMGM sportsbook, make sure you get all of the forms you need, and contact their customer support team if you don’t.
The good news is all US sportsbooks that legally operate in the country are well prepared and work in a way that ensures you will receive the correct documentation accurately filled out. This is another reason why you should avoid using offshore sportsbooks or casinos. In addition to your personal details not being protected, you will also be creating a tax problem that is just not worth it. Stick to the legal and licensed sites and you will be more secure with any financial dealings.
You can Deduct your Losses from Gambling
If you itemize your deductions, you can deduct your losses from gambling. This applies to any bettor but only up to the value of their total gambling earnings. You need to ensure you separately report your winnings and losses instead of doing it in a single document and reporting the total amount.
Players can deduct gambling losses on Schedule A and record them as miscellaneous deductions – which isn’t subject to a 2% limit. Moreover, you can deduct your losses up to the overall amount of your earnings as opposed to the value of 2% of your adjusted total income.
For instance, if you won $5,000 but lost $10,000, your itemized deduction is restricted to $5,000. You can’t use the $5,000 left to reduce your other taxable income.
Professional Gambling Tax
What if you gamble for a living instead of for fun, do the gambling tax rules change? Well, not really, but the answer is not straightforward, either. It is not allowed to deduct losses that are more than your winnings. This was proven in a case between Commissioner vs. Groetzinger in 1987, where the US Supreme Court ruled that loss deductions could not be more than earnings from winnings.
If you are constantly gambling with the aim of making a profit, then it transitions into your job. For this reason, rather than claiming your earnings as “other income” on your Form 1040, you have the option of filing Schedule C as a self-employed person.
This is a crucial difference because, with a Schedule C, you can take out other business costs. In essence, you cut down on your taxable income. Some of the costs you can deduct include:
- Payment for internet used in betting online
- Expenses on travel, food, and drinks whenever you attended tournaments
- Literature that has to do with your gambling profession
Legal options for Mobile and Online Betting in the US
Now, you’ll find out that more than 30 states allow you to gamble on sports. Below, we have covered the online and mobile sportsbooks available in the respective states.
- New Hampshire
- New Jersey
- New York
- North Carolina
- West Virginia
There are expected to be new states that will soon introduce a legal online sports or casino industry and we will update this page when that happens. No matter what state you live in, our gambling tax calculator is free to use and assumes a standard $12,400 deduction for single individuals with a $24,800 deduction for married individuals. Again, no matter which state you reside in, there are no local taxes added. It is simple to use to see deductible tax on your lotter winnings or the required tax paid.
Essential Gambling Records
According to the IRS, you must keep extensive records of your gambling activities including wins and losses. You must keep related documents like tickets, receipts, Form W-2G, and payment slips. Bettors who want to deduct losses must be able to prove winnings and losses. Based on the IRS recommendations, keeping a gambling log is a wise choice.
The following are a few of the details regarding your gambling wins and losses that must be available:
- Type of gambling
- Name and location of the activity
- Names of other individuals that were present when you made the wager
- Amounts of losses and winnings
It would be smart to adopt the habit of recording all gambling activities you partake in during every financial year.
Here are a few resources and sites that can be of help:
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We have numerous useful sports betting, online casino guides, and handy tools on our platform to help leverage your online betting activities. You may also want to have a look at our other helpful calculators and tools.
- Parlay calculator
- Hedge bet calculator
- Parlay builder tool
- Geolocation troubleshooting
How much can you win in a casino without having to pay taxes?
The highest amount you can win at a licensed casino without paying taxes is $600. This is the case aside from earnings you get from keno, slot machines, and poker tournaments if the amount is no less than 300 times your wager. This makes up for $1,500 or above in keno earnings, $1,200 or above from a slot machine, and $5,000 from a poker tournament.
How much do I have to pay in taxes on winnings from slot machines?
If your gambling winnings exceeded $5,000 on a bet and the payout is no less than 300 times your wager, the IRS states that you must withhold 24% of their earnings for income taxes. Slot machines are not exempted from this category.
What happens if I fail to report my gambling winnings?
This is dependent on the amount you did not report. However, you must report all winnings from your gambling activities. Failing to do so will cause problems with the law, and if you don't report more significant amounts over $1,200 – the consequences could be dire.
Can this sports betting tax calculator calculate gambling taxes for DraftKings and FanDuel winnings?
Are casino gambling winnings for taxes the same across states?
No, taxes differ depending on the state you are located in. For instance, if you are located in New Jersey, the tax rate is 3%, while in Virginia, it ranges from 2% - 5.75%. Make sure you check your state laws first to avoid surprises.
Can I avoid paying taxes on gambling winnings?
No, you can't avoid paying federal and state taxes on gambling winnings, except you don't win more than $600 in the casino. Anything beyond this is subject to taxes and failure to pay taxes can result in legal problems.
What is the gambling winnings taxable rate?
The federal rate on gambling is 24% if you report them on a Form W-2G. If you fail to provide your tax ID number to the payer, 24% is also the required tax paid.
How are group lottery wins taxed?
Winnings from lottery prizes are subject to federal and state taxes. You will need to pay the fair market value of your lottery winnings. The same tax liability is applicable to multi state lottery wins.
Do California and New York have the same gambling tax?
No, they do not. New York has a state income tax rate of 8.82%, which is one of the highest, while California ranges from 1% - 13% depending on your annual income and type of gambling activity. If you earn more, you'll be placed in a higher tax bracket.