I’ve recently started online gambling and have been lucky enough to have some winnings. However, I’m not sure how taxes apply to these income. I’ve read that gambling winnings are generally subject to federal taxes but I’d like to know how much exactly I am obliged to pay.
Also, I’m quite confused regarding different gambling activities. Are there any specific tax rules if I win from bingo, slot machines or poker tournaments? Or is it the same for all types of gambling earnings? Lastly, I read about some form called a W-2G, which should be filled out for certain gambling winnings. Anyone knows more about this?
In terms of my location, I am based in the USA. Do states have different rules? I currently reside in Florida, if that influences anything. You can imagine how this taxation scenario is giving me a headache. I’d like to properly understand this so as not to run into trouble with the IRS. Any advice or guidance will be greatly appreciated.
As a general rule, all gambling earnings are treated as taxable income by the IRS, so congratulations on your winnings, but be sure to put some aside for the tax man. The exact amount you’ll owe depends on your total income, including your gambling winnings. In terms of specific amounts, it’s harder to pin down since the US tax system is progressive, so higher income levels are taxed at higher rates.
Regarding different types of gambling, the IRS makes no distinction between earnings from different games, so winnings from bingo, slot machines, poker – it’s all treated the same. However, you should be aware of the W-2G form you mentioned. This is a form that casinos provide when you win a certain amount (usually over $600). They’ll give you one copy, send one to the IRS, and keep one for their records, so the government is aware of these larger winnings. And about state taxes: yes, each state has its own rules. However, you’re in luck living in Florida, as there are no state taxes on gambling winnings there. Keep track of all your winnings and consult with a tax professional if your earnings are substantial.