What Is Form W-2G?
Form W-2G is a document that a gaming facility may send you in January if you received winnings from gambling in the prior year. The form contains information you will have to report when filing your taxes, including the amount of your winnings, the date they were won, the type of wager you made, and how much federal and state income tax was already withheld.
- Depending on how much you won, a gaming facility may send you a Form W2-G that records your winnings and any income tax withholdings from the previous year.
- The IRS requires U.S. citizens to report all gaming income on their tax return, even if you did not receive a W2-G.
- You can report gambling losses on Schedule A as a way to reduce your tax liability, but only if you itemize your deductions.
Who Receives a Form W-2G?
Under IRS rules, you must report winnings from any type of gambling activity—including lotteries, racing, bingo, sports, slot machines, and cards—no matter how much you earned. This includes money you may have won in a foreign country.
To accurately document your winnings, gaming facilities are required to send you a Form W-2G if your gambling income exceeded any of these thresholds in the previous calendar year:
- $600 or more from horse racing (if the win pays at least 300 times the wager amount)
- $1,200 or more from bingo or slot machines
- $1,500 or more from keno
- $5,000 or more from poker tournaments
Typically, the winnings are calculated by subtracting any wagers or buy-ins from the final payout. Depending on how much you gambled, you may receive W-2G forms from more than one facility. If that’s the case, you would report the amounts from each form individually.
If you’re sent a W-2G and don’t include the winnings on your tax form, there’s a good chance you’ll receive an IRS Notice CP 2000 ("Underreported Income") in the mail. That letter will provide information about the apparent discrepancy and include steps you need to take in order to resolve the issue.
Even if you don’t receive a W-2G, however, you’re still required to report your earnings on your year-end tax form. Therefore, 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 information on any W-2G forms you receive.
There are two different types of withholding for gambling winnings: regular and backup.
How Much Tax Is Already Withheld?
Based on the type of gambling activity and how much you won, the facility may have already withheld part of your winnings to help cover federal income taxes. The amount already withheld for federal taxes is noted in Box 4 of the Form W-2G. State and local tax withholdings are provided in Boxes 15 and 17, respectively. There are two types of withholding for winnings from gambling: regular and backup.
With regular withholding, the gaming facility must withhold 24% of your winnings on cash payments where the winnings minus the wager are $5,000 or more. This applies to winnings from:
- Wagering pools
- Other wagers (if the winnings amount to at least 3000 times the amount of the wager)
The rate is also 24% for noncash payments (less the amount of the wager) if the winner paid the withholding tax to the gaming or lottery sponsor. The rate goes up to 31.58%, however, when the payer contributes the withholding tax.
Payments for bingo, slot machines, keno, and poker tournaments may be subject to 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. For example, individuals in the highest 37% bracket would have to pay an additional amount to make up for the difference in rates. Conversely, those paying a lower federal rate than that of the withholding will see their refund increase—or balance due decrease—by the difference.
In addition to providing information about federal income tax withholding, the W-2G also contains information about any state and local taxes that were taken out. Therefore, it can be helpful when filing taxes in a state that taxes winnings from gambling.
Can You Claim Deductions?
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. Further, you cannot deduct other expenses you may have sustained in the process of gambling, such as transportation and hotel charges.
Because the standard deduction was nearly doubled starting in the 2018 tax year, only a small percentage of taxpayers still itemize their deductions. If you think there’s a chance you may itemize, you’ll want to keep any receipts or other documents verifying your gambling losses.