So you’ve won a jackpot on the slots or defied the odds on a sports bet in Indiana. Other than bragging on social media, one of the next things you have to do is give the federal and state governments their cut.

Out-of-state lottery winnings are taxable for New Jersey Gross Income Tax purposes regardless of the amount. Gambling winnings from a New Jersey location are taxable to nonresidents. Gambling includes the activities of sports betting and placing bets at casinos and racetracks. You might also owe state income tax on any money you win from betting on sports, depending on which state you live in. For example, Nevada doesn’t have a state income tax. But Maryland does, and it considers winnings from gambling taxable income. If you win money betting on sports, check with your state to see if it taxes gambling winnings.

Do you have to pay taxes on Bovada winnings? Dec, 15, 2019 Posted in Gambling Tax Bovada is without a doubt the # 1 alternative for United States gamers to use given that the field sizes are substantial in their competitions, and the competitors exceptionally soft. But your winnings are unearned income, so you'll have to pay income tax on the money at the federal level and often at the state level as well. This shines a spotlight on tax brackets and tax rates because this is how much you’ll end up paying on what’s left of your winnings after you’ve taken all possible deductions from your overall income.

Winnings from all forms of gambling are taxable income, including winnings from:

• Lottery
• Slots
• Table games
• Sports betting
• Horse racing

Even if you put money down and win an organized Rock-Paper-Scissors competition, you have to pay taxes on the winnings. Even non-cash prizes like merchandise have to be reported on your federal and state income tax returns.

The idea that the Internal Revenue Service and the Indiana Department of Revenue won’t know is folly. The parties which pay out the prizes, whether that be casinos, sportsbooks, whatever, keep receipts and report them.

How much are my gambling winnings taxed in Indiana?

Effective for tax years after 2017, the federal rate on winnings over $5,000 is 24%. Winnings under that benchmark of $5,000 must also be reported depending on their amounts and sources.

Currently, Indiana’s personal income tax rate is 3.23%. Almost all gambling winnings are subject to this tax.

Casinos typically withhold 25% of your winnings for tax purposes. That is only the norm if you provide them with your social security number, however. If you decline that option, they usually withhold 28%.

How to determine if your winnings are taxable income

Another service the casinos usually provide for mutual benefit is sending you the appropriate paperwork. Fortunately, Indiana allows you to fill out the same form for both purposes.

Form W-2G, Certain Gambling Winnings reports your winnings for the year to both the IRS and you, in case you haven’t been keeping track.

The amount on this form will include any winnings from the year which qualify for federal taxes. That total will consist of:

• Your winnings (not reduced by the wager) of at least $1,200 from a bingo game or slot machine
• The winnings (reduced by the wager) of at least $1,500 from a keno game
• Your winnings (reduced by the wager or buy-in) of at least $5,000 from a poker tournament
• The winnings (except winnings from bingo, slot machines, keno, and poker tournaments) reduced, at the option of the payer, by the wager are $600 or more, and at least 300 times the amount of the bet
• Your winnings that are subject to federal income tax withholding (either regular gambling withholding or backup withholding)

How to report your gambling winnings to the IRS

The IRS requires you to report the total of your all qualifying gambling winnings for the year on a Form 1040. If you get the W-2G from the payers of your winnings, it’s a simple process of adding up those winnings and the amount of tax they withheld and then transferring those totals onto the 1040.

Add up all the numbers from Box 1 on the W-2G forms and separately, calculate the sum of all the numbers from Box 2. Place the Box 1 total on line 21 of the 1040 and place the Box 2 sum on the line designated as federal income tax withheld.

Even if the game operator didn’t do its job and you didn’t receive a W-2G, that doesn’t mean you’re off the hook.

You are still required to report all your gambling winnings from the year on the form 1040. To do that, fill out Schedule 1 with your gambling winnings as “Other Income.” Attach that to Form 1040 and include it in your personal income tax return.

So what if you weren’t flying solo, but pooled your resources together with others to maximize your chances of winning it big? That doesn’t change much.

Paying taxes on a shared prize

The IRS is prepared for this scenario. Form 5754is your go-to.

This is the form to use when you receive gambling winnings, not in your name on a W-2G. This form is also appropriate when you’re part of a group of two or more people sharing winnings.

The important thing to remember is that Form 5754 should not be included in your income tax return. Fill it out and give it to the person who received the W-2G.

Keep a copy for your records. The person who received the initial W-2G should submit all the appropriate 5754s back to the casino so they can correctly record the transaction.

The casino will then send each person their own W-2G. From there, the process is identical to how you would report any individual winnings.

How to report your gambling winnings to Indiana

As previously stated, Indiana is a state that allows you to use Form W-2G for your state income tax return as well. To do so, transfer the amount from Line 7 of your Federal 1040 to Line 1 of your IT-40.

If all or part of your winnings came while you were outside of the Hoosier State, you still must report them. That includes winnings from multistate lotteries. Report them just as you would if they came from an in-state game.

There is one legal way to reduce your tax liability from gambling winnings. It only applies if you opt to itemize your deductions, however.

Indiana and IRS gambling deductions for taxes

The IRS does allow a deduction for gambling losses. It cannot be claimed if you take the standard deduction on your return, however.

For those who itemize, gambling losses go on Line 28 of Schedule A, Form 1040. You cannot claim a deduction larger than your reported winnings.

And just because you deposit more than you withdraw from your bank account is not necessarily sufficient evidence. You must prove your losses.

You also cannot deduct expenses incurred along the way. The cost of your hotel and meals are just part of the necessary out-of-pocket expense.

If you opt to itemize and claim gambling losses, you’re better off keeping the following for your records:

• The date and type of each wager
• Where you placed the bet, i.e., the name of the casino
• How much you won or lost
• Wagering tickets
• Canceled checks
• Credit card records

Casinos can make this easy for you as well. If you’re part of their rewards programs, getting an annual summary of your gambling losses is quite simple.

The same goes for any winnings from the latest gambling option, legal sports betting in Indiana.

Taxes on sports betting winnings

With legal sports betting new to Indiana, there are plenty of people betting on college football and the NFL. Your parlay on Notre Dame football or Purdue football games is also taxable income if it exceeds $600. It doesn’t matter whether you placed your wager at an Indiana online sportsbook, inside a casino, on a kiosk at an off-track betting site or on your phone from your couch.

Just like other types of gaming operators, the book you placed your bet with should send you a W-2G. You can use that to report your winnings and withholdings to both Indiana and the IRS.

The positive side of that is just like any other gambling losses; the money you lose betting on sports can be deductible if you choose to itemize. Just as with any other deductions you claim, keeping detailed records is essential.

With any money that is deemed income by the IRS, it’s important to know what your specific tax bracket is to avoid underpayment. The highest federal tax rate is currently 35%, and that’s in addition to the 3.23% you would owe the state on your sports betting winnings.

As most operators only withhold 25% of winnings automatically, you may owe additional federal tax above and beyond what the operator withheld based on your personal income. That amount would be due upon filing.

That applies equally to those who play casino games in person and online in the Hoosier State.

Taxes on online casino games and online poker

While online poker and online casinos have yet to be legalized, when they do, taxes will work the same as they do at land-based casinos.

The operators of the games should send you a W-2G summing up all your winnings from the year once they reach certain thresholds depending on the type of game. Those are:

• Your winnings (not reduced by the wager) of at least $1,200 from a bingo game or slot machine
• The winnings (reduced by the wager) of at least $1,500 from a keno game
• Your winnings (reduced by the wager or buy-in) of at least $5,000 from a poker tournament
• The winnings (except winnings from bingo, slot machines, keno, and poker tournaments) reduced, at the option of the payer, by the wager are $600 or more, and at least 300 times the amount of the bet
• Your winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding)

With the W-2G in hand, you have what you need to report your winnings and pay any applicable taxes to both the state of Indiana and the IRS. Let’s review all the pertinent information that is relevant regardless of where your winnings came from:

• The gaming operator you placed your wagers with should send you a W-2G
• You can use the W-2G to report your winnings on both your federal and state taxes
• How much federal tax you pay depends on your personal income
• The Indiana rate is 3.23%
• If you don’t get a W-2G, you still have to claim your winnings as income if they qualify
• You can deduct your losses on your federal return, but you must itemize
• If you do go that route, keep any and all records from the transactions

With those simple things in mind, you too can stay safe from tax fraud while gaming in Indiana. Enjoy the games!

After the thrill of collecting gambling winnings, comes questions about taxes.

Yes, gambling income, which includes winnings from slots, table games, horse racing, sports betting, lottery games, jackpots, and the like, is considered taxable income. As such, you are required to report them on your tax return. The car, boat, or Harley Davidson and other noncash prizes also need to be reported.

There are plenty of questions surrounding Pennsylvania taxes and gambling winnings. Now there are even more with the advent of sports betting, betting apps, and online casinos in Pennsylvania.

Here are some answers.

How much are my gambling winnings taxed?

Casinos withhold 25% of winnings for those who provide a Social Security number. If you do not provide your Social Security number, the payer may withhold 28%.

Currently, Pennsylvania’s personal income tax is a flat tax rate of 3.07% which applies to all taxable income, including gambling and lottery winnings. PA has the lowest rate of all states with a flat tax.

The new regular withholding rate

Effective for taxable years beginning after December 31, 2017, the withholding rate under Section 3402(q) applicable to winnings of $5,000 or more from sweepstakes, wagering pools, certain parimutuel pools, jai alai, and lotteries (formerly 25%) is 24%.

Federal Form W-2G, Certain Gambling Winnings

The organization that pays the winnings, in most cases, the casino, is responsible for sending the recipient of the winnings Form W-2G, Certain Gambling Winnings.

Form W-2G reports the amount of winnings to you as well as to the IRS.

The payer is required to send Form W2G only if the winner reaches the following thresholds:

• The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine
• The winnings (reduced by the wager) are $1,500 or more from a keno game
• The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament
• The winnings (except winnings from bingo, slot machines, keno, and poker tournaments), reduced by the wager, are:
  • $600 or more, and
  • At least 300 times the amount of the wager
• The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding)

How to report PA gambling winnings on taxes

According to the IRS, you must report the full amount of your gambling winnings each year on your federal taxes. First, you report gambling winnings as

You may receive a Form W-2G showing the amount of your gambling winnings and any tax withheld. Include the amount from box 1 as “Other Income” on Form 1040, Schedule 1 (PDF).

That number then goes on your U.S. Individual Income Tax ReturnForm 1040 (PDF), line 7a (designated “Other Income”). You should attach the Schedule 1 form to your Form 1040.

Include the amount shown in box 2 on the W-2G on line 17 (designated as federal income tax withheld) of your Income Tax Return (Form 1040).

Pennsylvania state taxes for gambling

In addition to federal taxes payable to the IRS, Pennsylvania levies a 3.07% tax on gambling income.

You should report your Pennsylvania taxable winnings on PA-40 Schedule T (PDF). Include the total winnings from line 6 of Schedule T on your Pennsylvania Income Tax ReturnPA-40 (PDF), line 8 (“Gambling and Lottery Winnings”).

If your gambling winnings come during a trip to another state or country, you are still required to report.

Michelle Malloy, Esq. at AUA Capital Management, LLC in Conshohocken, Pennsylvania, commented:

“Pennsylvania takes the position that they are entitled to tax a portion of your worldwide income based on certain income items (wages, interests, dividends, capital gains, gambling winnings, lottery winnings, etc).”

Do I Have To Pay State Taxes On Gambling Winnings Real Money

What if I don’t receive a Form W2-G?

If you did not receive Form W-2G, your winnings are still considered taxable income and should be reported. A payer is required to issue you a Form W-2G if you receive certain gambling winnings or have any gambling winnings subject to federal income tax withholding.

According to Malloy:

“You are required to report all gambling winnings for federal and Pennsylvania taxes. If you hit a certain threshold they (the casino) will withhold money. In the instance where a casino doesn’t do their job and and fails to send you a W2-G you are still required to report your winnings, or you run the risk of underreporting your taxable income for the year.”

Do I have to pay taxes if a group of people win the lottery?

What happens when a group of coworkers chip in on a lottery ticket that wins? What about you and a friend who put money on a long-shot team to win the championship?

Meet Form 5754 (PDF). Payers use this form to prepare Form W-2G when the person receiving gambling winnings subject to reporting or withholding is not the actual winner or is a member of a group of two or more people sharing the winnings.

Don’t send Form 5754 to the IRS. Keep a copy for your records and return the form to the payer (usually the casino) for preparation of Form W-2G for each person listed as winners.

Are there any deductions available for taxes related to gambling?

Gambling losses can be deducted. However, they must be itemized on line 28 of Schedule A, Form 1040.

Also, you cannot deduct more than your winnings.

Expenses related to any gambling or lottery activities, (like your dinner at the steakhouse, celebratory drinks from the bar, or cost of hotel room) cannot be deducted.

If you are going to deduct gambling losses, keep these records:

• The date and type of each wager
• The name and location of the bet
• The amount won or lost
• Wagering tickets
• Canceled checks
• Credit card records

When using a players club/members card, casinos can track players’ spend. Therefore, you can request a win/loss report that will give you a fairly good sense of your activity in a casino. Online casino players can request the same report and most sites should be able to provide it without issue.

“A lot of people may under-report,” explained Malloy. “They might win $10,000 but have $3,000 of expenses so they think they are just going to report $7,000. That can be an issue, as Pennsylvania does not allow a deduction for expenses. If you win a lot of money in June, for example, you might want to make an estimated tax payment [due Sept. 15 and Jan. 15] so you don’t have an underpayment penalty the following April.”

How to claim gambling winnings and/or losses

Pennsylvania provides a helpful resource to determine how to claim gambling winnings and/or losses.

Do You Have To Pay Federal Income Tax On Gambling Winnings

There is a prompt where you can start a ten-minute interview.

Be sure to have the following information ready:

• Your and your spouse’s filing status
• Amount of your gambling winnings and losses
• Any information provided to you on a Form W-2G

Taxes on multistate lotteries

The Pennsylvania Department of Revenue considers multi-state lottery prizes, like those from Powerball and Mega Millions, awarded on tickets purchased through a licensed Pennsylvania state lottery ticket vendor, a prize by the Pennsylvania Lottery.

“Such prizes are considered Pennsylvania source income and both residents and nonresidents are subject to tax on such income if the prize is a cash prize. Multistate lottery prizes awarded on tickets purchased through a vendor in another state lottery are considered prizes awarded by that state lottery. Such prizes are not considered Pennsylvania source income and only residents are taxed on such income regardless of whether the prize is a cash or noncash prize.”

Due to a 2016 law change, any cash prize won from a Powerball of Mega Millions ticket in any state is taxable for state purposes, in addition to federal taxes.

What happens if you win a few thousand dollars on a winning PA lottery ticket?

Lottery winnings are included in taxable income. Pennsylvania Lottery winners of an individual prize valued at more than $600 will receive a Form W2-G by mail.

If your spouse also wins, they must report their winnings separately.

Do I Have To Pay State Taxes On Gambling Winnings Losses

“For a significant windfall, like over $5 million, it definitely makes sense to talk to an attorney or accountant to determine if they should take a lump sum payout or annuity. They may also need to think about estate tax planning, financial planning and/or asset protection planning for their windfall,” said Malloy.

Sports betting winnings and taxes

Sports betting winnings are taxable income.

The IRS states:

“Gambling winnings are fully taxable and you must report the income on your tax return. Gambling income includes but isn’t limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes, such as cars and trips.”

Even though sports betting isn’t specifically listed, it falls under the umbrella of “gambling winnings.”

Wherever your sports betting win occurred – at the OTB, the casino, on a sports betting app – they payer should send Form W-2G.

Sports betting losses might also be used as deductions if you itemize your deductions and keep a detailed record of wins and losses.

Based on your tax bracket, sports bettors in Pennsylvania could owe up to 35 % of winnings to the federal government in addition to the 3.07 % Pennsylvania taxes net gambling winnings.

Do You Have To Pay State Taxes On Gambling Winnings In Oklahoma

Online gambling and taxes

Sports betting apps and online casinos provide unmatched convenience. You may also enjoy the anonymity of playing behind a screen name instead of in person. However, it still comes with the same tax responsibilities. Online gambling winnings are considered taxable income at the same rate as other gambling winnings.

For online gambling winnings, the payer is required to send Form W2G only if the winner reaches the following thresholds:

• The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine
• The winnings (reduced by the wager) are $1,500 or more from a keno game
• The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament
• The winnings (except winnings from bingo, slot machines, keno, and poker tournaments), reduced by the wager, are:
  • $600 or more, and
  • At least 300 times the amount of the wager
• The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding)

In terms of deductions for taxes, players can request a report from online casinos detailing wins and losses.