Win/Loss Statement Taxes Explained
Taxpayers are required to report all gambling wins to the IRS as additional income, but the good news is that if they have also experienced gambling losses, they can claim the losses up to the amount of their winnings as a tax deduction when they file their federal tax return with the IRS.
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Key Takeaways:
- Taxpayers who win a certain amount when gambling at a casino will be provided with a win/loss statement, known as IRS Form W-2G, Certain Gambling Winnings, which can be used to report their gambling wins and losses on their tax returns.
- The win/loss statement provided by the gambling entity serves as a guideline for taxpayers, but the individuals who gamble are solely responsible for keeping a record of their gambling wins and losses for tax purposes, including storing receipts, tickets, and statements.
- All gambling revenue is considered taxable income, including winnings from lotteries, horse races, dog races, raffles, casinos, poker games, card games, and sports betting.
- Gambling winnings and losses must be reported separately on an individual’s tax return, and the amount of gambling losses can never exceed the gambling winnings reported.
What Are Win/Loss Statement Taxes?
Taxpayers who win a certain amount of money through gambling at a casino or another type of gambling entity will be provided with a filled-out version of IRS Form W-2G, Certain Gambling Winnings, also known as a win/loss statement, which is a tax form that they can use to report their gambling wins and losses on their tax returns.
What Is A Win Loss Statement?
A win/loss statement is a document that estimates the amount of money an individual won or lost through gambling during a calendar year based on the player monitoring data offered by the establishment.
While the win/loss statement provided by the gambling entity exhibits as a good guideline for taxpayers when preparing their tax documents, this win/loss statement is not considered a replacement for the individual’s own record-keeping responsibilities. Instead, this statement serves as a quality comparison for when taxpayers who casually gamble need to determine their gambling history from throughout the previous tax year.
What Is Gambling Revenue?
The types of gambling income that taxpayers are required to report to the IRS on their tax returns include winnings from:
- Lotteries
- Horse races
- Dog races
- Raffles
- Casino games
- Poker games
- Card games
- Sports betting
Is Every Taxpayer Required To Pay Taxes On Gambling Wins?
Depending on the type of gambling games and their set reporting thresholds, taxpayers are required to disclose their gambling earnings to the IRS.
Taxpayers must report their gambling taxable income for winnings above:
- $1,200 on a slot machine
- $5,000 in a poker tournament
- $1,500 in keno
- $600 in “other” gambling winnings.
Who Can Claim The Gambling Tax Deduction?
Taxpayers will be eligible to claim the tax deduction for gambling losses up to the amount of gambling wins they receive if they are casual or recreational gamblers. This category excludes individuals who engage in professional gambling or gambling as a business.
Who Must Keep Track Of Gambling Wins and Losses?
While casinos and gambling establishments will keep track of the wins and losses for clients, individual gamblers are in charge of keeping an accurate record of their wins and losses, including providing receipts, tickets, statements, or other records, in order to report gambling wins as additional taxable income and to claim gambling losses as deductions when they file their federal income tax returns.
How Do Casinos Create Win Loss Statements
Casinos create win/loss statements to report gambling activity, including their wins and losses, by recording gamblers’ victory amounts and Social Security numbers.
The casino can then write off the victory amount as an expenditure when they file their business taxes and provide the gambler with a record of their winnings and losses using IRS Form W-2G, Certain Gambling Winnings.
Other gambling winnings that do not fall under the categories listed within the W-2G form may instead be reported using an IRS Form 1099-MISC, Miscellaneous Income.
How To Request A W2-G Form
If taxpayers have won or lost money through gambling at a casino or another gambling facility, when it comes time to file taxes, the individual is responsible for contacting the casino directly to request a copy of the W2-G tax form.
When requesting a copy of this form, the casino may request the taxpayer verify their identity to ensure their tax documents are not being shared with the wrong person.
How To Request A 1099-MISC Form
Taxpayers who have been awarded more than $600 in miscellaneous gambling winnings within a tax year will report their income to the IRS using a 1099-MISC tax form that is filled out by the casino or gambling establishment.
In order to request this tax form from the casino, taxpayers should fill out a W-9 Form, Request for Taxpayer Identification Number and Certification, and send it to the gambling establishment so that they have all the information required for them to complete the 1099 form for tax filing purposes.
Gambling Tax Withholding
It is common that casinos and gambling entities will withhold a portion of the player’s gambling earnings for tax purposes if the business resides in a state that requires tax withholding. If the casino does withhold a portion of the winnings for taxes, the individual will owe less money on their gambling taxable income when they file their tax return during the tax season.
However, not all casinos will withhold gambling income from their payments, usually due to the fact that tax withholding generates more paperwork and impacts the facility’s immediate income. The taxpayer is responsible for ensuring they pay taxes on all of their gambling winnings, whether the tax payments are submitted when they file their taxes, or if they pay through tax withholding.
Deducting Gambling Losses
Taxpayers can only deduct gambling losses from their taxes if the loss amount is lower than their gambling winnings.
Itemized Deductions
Taxpayers who qualify to itemize their tax deductions using Schedule A (Form 1040) under miscellaneous deductions when they file their tax returns may also be able to deduct their gambling losses.
In order to claim gambling losses as an itemized deduction, the taxpayer must also keep a meticulous record of their wins and losses so they can be claimed as “Other Itemized Deductions,” as long as the deduction amount is less than the amount of gambling income they reported on their tax return.
Standard Deductions
Taxpayers must claim their gambling losses under standard deductions instead of itemized deductions if their gambling winnings and losses, as well as their other itemized expenses, are lower than the standard deduction amount for their filing status.
Taxpayers who claim the standard deduction for their gambling losses will not be able to itemize their losses and are still required to pay taxes on all of their gambling winnings.
Information Required To Report Gambling Wins and Losses To The IRS
For taxpayers to be able to claim their gambling winnings or losses, they first must gather all of the information they will need to file the appropriate tax forms with the IRS. These details include:
- The gambler’s filing status
- The filing status of their spouse
- The amount of their gambling winnings and losses
- The date and type of gambling they engaged in
- The names and addresses of the gambling locations
- The names of the people the player gambled with
- The amount of money they won and lost
- The information reported by a casino on Tax Form W-2G or 1099-MISC
Taxpayers may feel nervous to learn that they are required to report their gambling winnings as additional taxable income and feel unsure about how to deduct their gambling losses from that income, but with tax advice from the experts at a tax relief company like Ideal Tax, they can feel confident in their compliance with the tax law and their strategy to save as much money on taxes as possible. If you need help with the disclosures of your gambling history to the IRS or if you have any other questions about taxes, set up a free initial consultation with a tax professional today and get all of your questions answered.
Luis serves as the Director of Operations for Ideal Tax, overseeing a multifaceted team including case management, tax professionals, document specialists, customer support, training, and development.
