What Is Form W-2G: Certain Gambling Winnings?
Form W-2G is an Internal Revenue Service (IRS) document that a casino or other gambling establishment sends to customers who had winnings during the prior year. It details the amount that must be reported as income on their tax return. Its full title is Form W-2G, Certain Gambling Winnings.
Form W-2G 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.
Key Takeaways
- 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 must be reported as "Other Income" on Form 1040.
- Cash and the cash value of prizes are taxable.
- State and local taxes may be due on winnings.
- You can offset your tax liability by deducting your losses but only if you itemize.
Understanding Form W-2G
Under IRS rules, you must report winnings from any type of gambling activity no matter how much or how little you win. These activities include lotteries, racing, bingo, sports, slot machines, and card games. Winnings also include any money won in a foreign country.
Gambling facilities are required to document your winnings with Form W-2G if they meet these thresholds:
- $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
- Any other winnings that require federal income tax withholding
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.
Failure to Use Form W-2G
If you receive a W-2G and don't report the winnings, you'll eventually receive an IRS Notice CP2000 ("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.
For your own recordkeeping, 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.
Even if you don't receive a W-2G, you're required to report your gambling winnings as income.
You may receive W-2G forms from more than one gambling facility. If that’s the case, you must report the amounts on each form separately.
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 establishment may have withheld part of your winnings to cover federal income taxes that you owe.
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.
Regular Withholding
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 withholding applies to winnings from:
- Sweepstakes
- Lotteries
- Wagering pools
- Other wagers (if the winnings amount to at least 3,000 times the amount of the wager)
The rate is 24% for noncash payments as well, if the winner paid the withholding tax to the gaming or lottery sponsor. If not, the rate goes up to 31.58%.
Backup Withholding
Payments for bingo, slot machines, keno, and poker tournaments may be subject to backup withholding, which is also determined with a 24% rate.
Backup withholding is required for any of the following:
- You didn't provide a correct taxpayer identification number (TIN) to the gaming facility.
- Regular withholding didn't occur.
- The winnings total at least $600 and are 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% level that is regularly used to withhold from gambling winnings: 32%, 35%, and 37%.
You may owe less or even get money back if your total income falls below the 24% rate, which applies to incomes of $95,375 ($190,750 if married and filing jointly) for the 2023 tax year. For 2024, the 24% tax rate applies to incomes over $100,525 ($201,050 for married couples filing jointly).
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.
That will be helpful when filing taxes in a state where gambling winnings are taxed.
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 that you may itemize your taxes, you'll want to keep any receipts and other documents that verify your gambling losses.
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All versions of Form W-2G are available on the IRS website.
Do I Have to Report Gambling Winnings to the IRS?
The IRS states: "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, amounts are 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 and must be reported. You may receive one or more W-2G forms from gambling establishments for taxable winnings, but the forms are required to be sent to you 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 your 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?
No, the W-2G form is the equivalent of a 1099. 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 W-2G Forms to the IRS?
No, the W-2G form isn't sent to the IRS by the taxpayer. The entity that sent the W-2G form to the taxpayer files the information with the IRS. But taxpayers should maintain the W-2Gs that they receive in case of an audit or a question from the IRS.
The Bottom Line
The IRS requires you to report your gambling winnings on your federal income taxes. When you receive a Form W-2G from a gambling establishment, it will list your winnings as well as any federal tax withholdings. If you won more than $5,000, the gambling establishment may have already withheld 24% for taxes.
