Gambling Winnings Tax

 

Editor’s note: Consider this scenario: you win the Powerball and strike it rich—or so you think. But what’s the Powerball after taxes? This post shares information about your lottery payout after taxes, including taxes on casino winnings and more.

 

Gambling winnings taxHave you just won the state’s Powerball? Lucky you! While you might be excited at first, afterward you might start thinking about Powerball after taxes… Will the amount be way less? We’ll tell you now.

Gambling Taxes: 101

Here’s the truth with gambling taxes: both cash and noncash gambling winnings are fully taxable.

What Are Cash Winnings?

Cash winnings include money you received from:

  • Lottery payouts
  • Sweepstakes
  • Bingo
  • Raffles
  • Poker and other games
  • Keno
  • Slot machines
  • Casino winnings

What About Non-Cash Winnings?

Your winnings might be noncash — like a vacation or a car. If so, you must include its fair market value (FMV) when figuring your income.

Reporting Gambling Profits and Loss on Your Taxes

Gambling Losses Can Be Deducted on Schedule A.

If you itemize your deductions, you can deduct your gambling losses for the year on Schedule A. However, you can only deduct your loss up to the amount you report as gambling winnings. So, you should keep:

  • An accurate diary of your gambling winnings and losses
  • Documentation of your gambling activity that can be verified

How Winnings Are Reported to the IRS: Form W-2G

The payer must provide you with a Form W-2G if you win:

  • $600 or more if the amount is at least 300 times the wager (the payer has the option to reduce the winnings by the wager)
  • $1,200 or more (not reduced by wager) in winnings from bingo or slot machines
  • $1,500 or more in winnings (reduced by wager) from keno
  • More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament
  • Any winnings subject to a federal income-tax withholding requirement

If your winnings are reported on a Form W-2G, federal taxes are withheld at a flat rate of 24%. If you didn’t give the payer your tax ID number, the withholding rate is also 24%.

Withholding is required when the winnings, minus the bet, are:

  • More than $5,000 from sweepstakes, wagering pools, lotteries,
  • At least 300 times the amount of the bet

You should receive a copy of your Form W-2G showing the amount you won and the amount of tax withheld. Even if you don’t receive a Form W-2G, include your winnings on your return.

Where to Go for Help with Powerball After Taxes or other Lotto Winnings

Navigating your tax obligation after you get lucky with the Powerball or other cash or non-cash gambling endeavors can get tricky. So, get help. Use H&R Block to file your taxes. With many ways to file your taxes, including online or in-office, we can fit your needs and guarantee an accurate tax return.

Related Topics

Related Resources

Garage Sale Money and Capital Gains: What You Should Report to the IRS

Do capital gains apply to garage sale money? The answer depends on a number of factors. Learn more at H&R Block.

For Pro Golfers, Tough Taxes Are Par for the Course

Professional golfer taxes can be complicated and confusing. Learn more about tricky golfer tax issues like travel deductions and residency rules with H&R Block.

How Renting Out Your Extra Bedrooms Affects Your Taxes

Thinking about renting out a room in your home? Learn more about the potential tax implications with the experts at H&R Block.

How do I calculate taxable income?

Finding your taxable income is an important part of filing taxes. Learn how to calculate your taxable income with help from the experts at H&R Block.