How Much Taxes Do You Pay on Slot Machine Winnings?

how much taxes do you pay on slot machine winnings

As America is enjoying a gambling boom with casinos, sports betting, daily fantasy sports leagues and lotteries, many Americans dream of making it big in gambling. Unfortunately, taxes may get in the way. You can deduct your losses on your tax return; however, only up to the amount of your winnings (so if you hit big in slot machines and win $5,000 you must also report and pay federal income tax on that sum plus any state income taxes that apply in your state – separate payments).

How Much Taxes Must I Pay on Slot Machine Winnings? Your slot machine jackpot has just rung, releasing waves of excitement as your mind fills with possibilities of bills paid, vacations planned and maybe even buying a house! But wait before spending any of it just yet as there will be taxes to pay as the amount depends on how you play the game and its earnings-to-wager ratio, according to an CPA and tax expert at Turbo Tax who was quoted in The Sacramento Bee newspaper.

Usually if you win a substantial sum at a casino slot machine, the payer is required to send you an IRS Form W-2G detailing both the winnings and federal taxes withheld – regardless of what form the winnings may take such as lottery winnings, sports betting winnings or daily fantasy sports winnings.

Self-employed taxpayers who engage in gambling should report all winnings on their tax return regardless of whether or not they receive a W-2G from payer. Furthermore, it’s advisable to keep detailed records of both wins and losses from gambling activities as well as any monies that were spent gambling.

The IRS views all gambling winnings as taxable income, including slot machine jackpots and other forms of gambling. To determine taxable income, they use a formula which takes into account factors like type of casino game played and ratio between winnings to wager. Tax is applied based on individual marginal tax rates for taxation of total income earned.

Though some states do not require residents to report gambling winnings as income on their tax returns, most do. New Hampshire, Tennessee and Virginia all require payment of state gambling winnings taxes; here it must be added with other sources of income on a taxpayer’s return.

States may vary when it comes to how much gambling taxes you owe; all require that winnings are reported and tax forms have specific boxes set aside for reporting winnings.