What Is Form W-2G: Certain Gambling Winnings?
Form W-2G is a tax document that a casino or other gambling establishment sends to customers who had winnings during the prior year that must be reported as income to the Internal Revenue Service (IRS). Its full title is Form W-2G, Certain Gambling Winnings.
The form contains information that the taxpayer needs to file taxes for the year. It includes the total amount of winnings, the date or dates they were won, the type of wager, and how much federal and state income tax has already been withheld.
All gambling winnings are taxable but only some gambling winnings are recorded with a Form W-2G.
- The IRS requires U.S. citizens to report all gambling winnings as income, whether or not they receive a W2-G.
- Winnings from gambling, lotteries, and contests all must be reported as "Other Income" on Form 1040.
- Cash and the cash value of prizes are taxable.
- State and local taxes may also be due on winnings.
- You can offset your tax liability by deducting your losses but only if you itemize your taxes.
Who Can File Form W-2G: Certain Gambling Winnings?
Under Internal Revenue Service (IRS) rules, you must report winnings from any type of gambling activity—including lotteries, racing, bingo, sports, slot machines, and card games—no matter how much or how little you won. This includes any money won in a foreign country.
Gambling facilities are required to document your winnings with a Form W-2G under certain circumstances:
- $1,200 or more in winnings from bingo or slot machines
- $1,500 or more from keno
- $5,000 or more from poker tournaments
- $600 in winnings from other types of gambling, if the payout is at least 300 times the amount of the wager
Certain types of games, notably games of skill, do not have to be recorded with a W-2G but the income is taxable nonetheless.
Winnings are calculated by subtracting wagers or buy-ins from the final payout.
How to Use Form W-2G
If you're sent a W-2G and don't report the winnings, you'll eventually receive an IRS Notice CP 2000 ("Underreported Income") in the mail. That letter will provide information about the apparent discrepancy and detail the steps you need to take to resolve the issue.
Even if you don't receive a W-2G, you're required to report your gambling winnings as income. It's important to keep documents such as wager statements and payment slips any time you gamble. Those documents will also help verify the accuracy of the information on any W-2G forms you receive.
You may receive W-2G forms from more than one gambling facility. If that’s the case, you must report the amounts from each form individually.
Professional gamblers report their winnings as business income. Casual gamblers report winnings as "Other Income."
Special Considerations When Filing Form W-2G
Depending on how much you win and the type of game, the gambling facility may have withheld part of your winnings to help cover federal income taxes.
The amount already withheld for federal taxes is noted in Box 4 of Form W-2G. State and local tax withholdings are recorded in Boxes 15 and 17, respectively.
There are two types of withholding for winnings from gambling: regular and backup.
The gambling facility is required to withhold 24% of your winnings from cash payments when the winnings minus the wager total $5,000 or more. This is known as regular withholding.
Regular holding applies to winnings from:
- Wagering pools
- Other wagers (if the winnings amount to at least 3,000 times the amount of the wager)
The rate is 24% for non-cash payments as well, if the winner paid the withholding tax to the gaming or lottery sponsor. The rate goes up to 31.58% when the payer contributes the withholding tax.
Payments for bingo, slot machines, keno, and poker tournaments may be subject to backup withholding, which is also 24%.
Backup withholding is made when any of the following occurs:
- The winner didn't provide a correct taxpayer identification number (TIN) to the gaming facility.
- The regular withholding for gambling wasn't made.
- The winnings total at least $600 and at least 300 times the wager (or at least $1,200 from bingo or slot machines, $1,500 from keno, or $5,000 from a poker tournament).
You Could Still Owe Taxes
Depending on your federal income tax rate, the amount of the withholding may not be enough to cover your federal income tax liability. There are three tax brackets above the 24% that is regularly withheld from gambling winnings.
You may owe less or even get money back if your total income falls below the 24% rate.
In addition to providing information about federal income tax withholding, the W-2G also contains information about any state and local taxes that were withheld.
Therefore, it can be helpful when filing taxes in a state where gambling winnings are taxed.
Can You Claim Gambling Losses?
You cannot report your net winnings—that is, your winnings minus losses—on your tax form.
However, you can list your gambling losses as an itemized deduction on Schedule A in order to reduce your tax liability.
You may not, however, report losses in excess of your winnings. You cannot deduct other expenses you may have sustained in the process of gambling, such as transportation and hotel charges.
If you think there’s a chance you may itemize your taxes, you'll want to keep any receipts or other documents verifying your gambling losses.
All versions of Form W-2G are available on the IRS website.
Do I Have to Report Gambling Winnings to the IRS?
The IRS says: "Gambling winnings are fully taxable and you must report the income on your tax return." That covers lottery winnings, raffles, horse races, and casinos. Cash and the cash value of any prizes you win must be reported. If you're a "casual" gambler rather than a professional, it is reported as "Other Income" on Form 1040.
You can deduct losses up to the value of your winnings but that requires itemizing your taxes (and keeping paper records to prove your losses).
What Percentage of Gambling Winnings Should Be Reported?
All gambling winnings are fully taxable.
You may receive one or more W-2G forms from gambling establishments for taxable winnings, but the forms are required only if a certain amount is won on some but not all games.
Generally, the forms are required for winners of games of chance like slot machines but not for winners of games of skill like blackjack. Nevertheless, you owe taxes on both.
Note that the casino doesn't know how much you lost at its games. If you plan to deduct your losses, you must keep careful records and itemize your taxes in order to claim the losses.
Losses can be claimed up to the amount of winnings. So, if you win $1,000 and lose $1,000, you may owe no taxes on your gambling activities.
Do You Receive a 1099 for Gambling Winnings?
The W-2G form is the equivalent of a 1099 for gambling winnings. That is, it identifies the taxpayer and the amount won as well as the amount already paid in federal, state, and local taxes on the winnings.
Do I Have to Send My W2 and W-2G Forms to the IRS?
Neither the W2 nor the W-2G has to be sent to the IRS but they should be filed in case of an audit or a question from the IRS.
The organization that sent the W-2G form will file the information with the IRS.