Gambling winnings must be reported as income to the IRS, and Form W-2G is the document that gambling establishments send to customers who had winnings during the prior year. This article explains the requirements for filing Form W-2G, including the types of winnings that must be reported, how to use the form, and special considerations when filing.
What is Form W-2G?
Form W-2G is an IRS document sent to customers who received gambling winnings the previous year, and must be reported to the IRS as income. It includes the amount won, date won, type of wager, and federal/state tax withholdings. Certain types of games, like games of skill, do not require a W-2G to be issued, but winnings are still taxable. The IRS requires anyone who receives winnings from gambling, lotteries, and contests to report them as “Other Income” on their tax return. Taxpayers may need to file multiple W-2Gs from different gambling facilities, and may owe more taxes if the amount withheld doesn’t cover their total liability. They can report any losses to offset the winnings, but must itemize them. The W-2G also includes information about state and local taxes that may be due.
IRS Form W-2G – Who Needs to Fill It Out?
IRS Form W-2G is used to report gambling winnings to the IRS. When an individual wins $1,200 or more from bingo or slot machines, $1,500 or more from keno, $5,000 or more from poker tournaments, or $600 or more from other types of gambling where the payout is at least 300 times the amount risked, the gambling facility is required to send the individual a Form W-2G. Not only must winnings be reported on federal income tax, but individuals may owe additional taxes to state and local tax agencies. Backup withholding, at a rate of 24%, may also be necessary. Professional gamblers can report their gambling winnings as business income, while casual gamblers must report this income as “Other Income” on Form 1040. Losses can be deducted up to the value of the winnings.
Step-by-Step: Form W-2G Instructions For Filling Out the Document
Filling out Form W-2G, Certain Gambling Winnings, is relatively straightforward and largely involves providing information about your winnings, such as their total amount, the date won, the type of wager, and how much federal and state taxes have been withheld. Depending on the amount and type of game, the gambling establishment may have withheld part of your winnings for federal taxes – the amount already withheld is noted in box 4. State and local taxes are listed in boxes 15 and 17. Gambling establishments will also file the information with the IRS. If your total income is below the 24% rate, you may owe less or even receive money back. In addition to federal, state, and local taxes, you will need to remember to report any gambling winnings, even without a W-2G, as income on your return. Losses can offset your tax liability if you itemize your taxes up to the same amount of your winnings, but you must keep all records and receipts to prove such losses.
Below, we present a table that will help you understand how to fill out Form W-2G.
|Information Required for Form W-2G||Details|
|Total Winnings||Total amount of gambling winnings|
|Date of Winnings||Date when the winnings were received|
|Type of Wager||Description of the type of wager made|
|Federal Tax Withheld||Amount of federal taxes withheld by the gambling establishment (Box 4)|
|State Tax Withheld||Amount of state taxes withheld by the gambling establishment (Box 15)|
|Local Tax Withheld||Amount of local taxes withheld by the gambling establishment (Box 17)|
|IRS Reporting||Information filed with the IRS by the gambling establishment|
|Income Reporting||Reporting gambling winnings as income on your tax return|
|Offsetting Losses||Using losses to offset tax liability when itemizing deductions|
|Record Keeping||Keeping records and receipts to prove losses|
Do You Need to File Form W-2G Each Year?
Do You Need to File Form W-2G Each Year? Gambling winnings above certain thresholds must be recorded by the associated gambling establishment with a Form W-2G. These thresholds vary depending on the type of gambling activity (i.e. bingo, keno, poker tournaments, etc.), and all gambling winnings, regardless of the Form W-2G, must be reported as “Other Income” on Form 1040. The W-2G form identifies the taxpayer’s winnings and how much federal, state, and local income tax has already been withheld. Gambling losses, however, may be deducted to reduce tax liability, but only if you itemize your taxes. Furthermore, the form does not need to be sent to the IRS but should still be filed in case of an audit.
Download the official IRS Form W-2G PDF
On the official IRS website, you will find a link to download Form W-2G: Certain Gambling Winnings. However, to make it easier for you, we are providing the link in our article, which comes directly from the official irs.gov website! Click to download: Form W-2G