Gambling Winnings Tax | H&R Block

We all love to read stories about big wins and imagine ourselves in the shoes of those winners. But, have you ever thought about what happens at that very moment after successfully beating the slot machine? Usually, the slot machine locks up and, in most cases, you hear the music and see the flashing lights on top of the machine. But one of the first questions every player asks is whether they have to pay taxes on casino winnings? Well, you’re about to find out!

Taxes on Slot Machine Winnings in USA

In the USA, when a lucky player hits a jackpot, there’s the option of receiving the winnings in cash or check. In case it’s a large sum, it’s usually paid by check. However, the IRS only obliges the casinos to report winnings that are larger than $1,200.
Of course, all winners are obliged to show a proper identification— a valid ID or passport. When the casino checks for your identification they also look at your age to make sure you are officially and legally old enough to play. As the minimum legal age for gambling varies from state to state, be sure to check it out before you decide to play.

Do I Have to Report All Winnings?

All gambling winnings received from slot machines are subject to federal taxes, and both cash and non-cash winnings (like a car or a vacation) are fully taxable. Apart from slot machines, the same applies to winnings from lottery, bingo, keno, poker or other games of chance. So, if the amount won on a slot machine is higher than $1200, the casino is required to report it. In other words, all your gambling winnings have to be reported on your tax return as "other income" on Schedule 1 (Form 1040), line 8.

Slot Machine Winnings in W-2G Form

In case it happens to you and you snag that big win (which we hope one day you will), it’s useful to know that casino or other payer must give you a W-2G Form, listing your name, address and Social Security number. So, if the winnings are reported through a W-2G Form, federal taxes will be withheld at a rate of 25%.
If, however, you didn’t provide your Social Security number (or your Tax Identification Number), in that case the withholding will be 28%. Either way, a copy of your Form W-2G should be issued, showing the amount you won alongside the amount of tax withheld. One copy needs to go to the IRS, as well.
Aside from slot winnings, Form W-2G is issued to winners of the following types of gambling activities like:

• bingo (for players who win $1,200 or more),
• keno (for at least $1,500 worth wins)
• poker tournament players (for the $5,000 win or more).
• a horse track (if the winnings are 300x your bet)

However, not all gambling winnings are subject to IRS Form W2-G. For instance, W2-G forms are not required for winnings from table games like blackjack, baccarat, and roulette, whatever the amount. You’d still have to report your winnings to the IRS, it’s just you won’t need to do it through W-2G Form.

Are My Slot Losses Deductible?

The good news is that you can deduct your slot losses (line 28 of Schedule A, Form 1040), while the bad news is gambling losses are deductible only up to the amount of your wins. In other words, you can use your losses to compensate for your winnings. So, let’s say you won $200 on one bet, but you lost $400 on one or a few others, you can only deduct the first $200 of losses. Meaning if you didn’t win anything for a year, you won’t be able to deduct any of your gambling losses.
In order to prove your losses, you need to keep good records and have suitable documents. So, whenever you lose, keep those losing tickets, cancelled checks and credit slips. Your documentation must include the amount you won or lost, a date and time, type of wager, type of your gambling activity, name of each casino/address of each casino you visited and the location of their gambling business. You may as well list the people who were with you.

Do State and Local Taxes Apply Separately?

Yes, you are required to pay your state or local taxes on your gambling winnings. In case you travel to another state, and snag some huge winning combo there, that other state would want to tax your winnings too. But don’t worry, you won't be taxed twice, as the state where you reside needs to give you a tax credit for the taxes you pay to that other state.
Keep in mind though that some states like Connecticut, Massachusetts, and Ohio don't allow gambling losses.

Online Slot Taxes

Whether you usually spin the reels of your favourite casino games in land-based casinos in the US, overseas casinos, or online casinos, all income for the citizens of the US is taxable. As a US citizen, you are required to send Form W2G for all winnings from a slot machine (not reduced by the wager) that equals to or is more than $1,200.

Taxes on Slot Machine Winnings in UK

As a resident of the United Kingdom, your gambling winnings won’t be taxed. Unlike the USA mentioned above, you’ll be allowed to keep whatever it is that you have won and earned in Britain, even in case you are a poker pro. Then again, you won’t be able to deduct any losses you might collect.
It doesn’t really matter if you win £5 or £5 million playing online slots, your winnings will be tax-free as long as you reside anywhere in the UK, be that in England, Wales, Northern Ireland or Scotland.

Taxes on Slot Machine Winnings in Canada

If you are a recreational player who lives in Canada, we have good news for you. When it comes to gambling, you don't have to pay taxes as your winnings are totally tax free. According to laws in Canada, gambling activities don’t fall under the category of constant source of income, therefore your winnings will not be taxed.
Canadians don't even pay taxes on their lottery winnings. The only exception here are professional gamblers who make a living from betting and are, therefore, obliged to pay taxes. Keep in mind though, this is the current situation - laws in Canada change frequently, which may also include tax laws.

Taxes on Slot Machine Winnings in Australia

In case you reside in Australia and like to visit casinos from time to time, you’ll be happy to find out that your winnings in Australia will not taxed and here are 3 core reasons for that:

• Gambling is not treated a profession (it's treated as a hobby)
• The government doesn’t see profits from gambling activities as income, but as a result of good luck
• The Australian government taxes casino operators and lottery organisers instead.

Of course, taxation varies from state to state.

Taxes on Slot Machine Winnings in New Zealand

Unlike in Australia, where even professional players can claim they are recreational, in New Zealand slot machine winnings (and any other winnings from casino games) are considered taxable income, in case the player has little income from other resources.
But, apart from professional gambling, it is very unusual for winnings to be taxed in New Zealand. Most often, gambling is considered recreational and not income, so players can enjoy their gameplay as they do not have to pay taxes on their winnings.

Hi,
As the title says, I'm a professional poker player (and have been for the last 7 years). I haven't filed a tax return in 7 years since my last job. I don't claim any benefits from the government.
I would like to point out that in Australia gambling "winnings" are not taxed. And poker comes strictly under the code of gambling.
The main reason gambling isn't taxed is because we cannot declare our loses. So if I have a $150k profit this year and lose $80k next year, I am not able to write off my losses. I have not had a loosing year and generally only lose 1 or 2 months of the year.

• I also have 2 additional income streams. One is cash in hand and one is sports arbitrage. The sports arbitrage is dealt through Skrill and through bank accounts. There is also reasonable sums moving in and out through those avenues. I'm not sure on the tax situation regarding arbitrage, but i'm assuming it falls under the gambling umbrella.
  
• My bank account regularly has decent sizes sums moving in and out. I would say on a regular basis there is 2k - 25k transactions. Sometimes its overseas transactions, sometimes its local transfers, sometimes its deposit / withdraw of reasonable size sums via bank teller.
  
• I make 6 figures every year. I play primarily live poker so my earnings are in cash and only what i deposit or withdraw through my bank account is "tracked".
  
• I travel frequently and often declare the 5 figure sums i take in cash, at Australian customs. (I often travel to play poker overseas).
  
• When filling in the form i put "self employed" and reference my ABN which i registered for my startup 2 years ago. The startup has not made much money but it is still ongoing. We certainly haven't reached the taxable thresh-hold.
  

So now onto the question.
What is the legal status of my current set up. I feel its very grey area and I'm not sure how to proceed. I don't necessarily want to get audited and have to explain why there are large transactions and I am not employed. I am not laundering money or selling drugs, all the money is legitimate and primarily from poker.
Can anyone offer advice regarding my tax return situation. Also advice regarding my overall situation. I appreciate any thoughts on the matter. Thankyou.

TAXES: The IRS spends most of its resources processing tax returns for people making less than $60,000. Out of the total taxes collected in the US, the money collected from those people who make $60,000 or less is around a whopping 5% of the total collected tax revenue. At the same time, the IRS estimates that there's at least $20 billion in uncollected taxes that the IRS could probably collect through proper investigation if they had the resources. I would advocate that we stop collecting taxes from anyone who makes less that $60,000 a year so that the IRS can reallocate their resources to investigating rich assholes. I would also restructure the tax brackets. I would take the total amount of taxable income and divide it by the total amount of tax payers to come up with an 'ideal income'. This would probably be around $180,000 per household (probably more, I've been drinking). I would tax people making less than $180,000 but more than $60,000 20%, I would progressively raise the tax on people above those earnings and for anyone making more than $500,000 would be paying 40%. Not to punish high earners, I think they should pay more because they're benefitting much more from the playing field economy that's been given to them than other people. Basically, they were only able to make that money because the economy is regulated in such a way that someone else couldn't have immediately copied their work for resale or that the local law enforcement has prevented them from being robbed. A rich person has a lot more protect that anyone else, why shouldn't they pay more for those municipal services via taxes?
Immigration: Walls are for idiots. If we can estimate that there are 11 million undocumented workers in the US, then we should have enough information to be able to get these people registered for IDs and start collecting taxes from them. Need to give employer amnesty; if you've been paying illegal workers for work, you need to come clean in the next two months with your records and we won't prosecute. If you hold out, rewards will be paid to your competitors who snitch on you for employing illegal immigrants. One problem is that companies paying lower wages to illegal immigrants put upstanding businesses out of business, this practice has to be dealt with by jailing employers of illegal immigrants. Once registered, illegal immigrants will pay an immigrant tax on top of their income taxes until they become citizens. I would also create housing and jobs for refugees from war torn countries such as Syria, where businesses could interview the lot and have subsidies for training the immigrants in language or technology.
Abortion: Woman's choice. An American has rights only once it has been born, we don't call them 'Conception Certificates'.
Stem Cell Research: Do it, do it now!
Foreign Policy: This could go for days. I'll try to keep it short. I'd like to cut some defense spending by converting many overseas US bases into NATO or UN bases, where the cost would be shared but the US would maintain command of most of the bases. I also don't think we're winning the war on 'terror'. I would have a different approach. I don't think you can prevent terrorism, but, I do think you can find better ways to separate terrorists from everyone else. After reading a lot, I don't support Israel's claim to the land it inhabits and I would hope to negotiate a cease fire and the establishment of a democracy that included the Palestinians who actually lived there before the Israeli occupation. I would probably offer to leave China alone about their manmade south China sea islands if they would agree to a joint invasion of North Korea for the establishment of a stable government. Health Care: So let me get this straight. Other countries in the world offer free healthcare to their citizens, but we in US have thought it clever not to do so. Nope. Here's the issue. To my understanding, insurance is a math game, similar to casinos. Insurance companies hire actuaries (math people) who basically figure out how much each person of some age with some ailment will cost to treat, then the insurance company charges a bit more than that to insure them. Insurance is one of those industries that's prime for government takeover. You want the government to take over certain industries, those that everyone needs but no company could possibly make a profit from if they did it right. My understanding is that insurance is like a pool. Insurance companies put us all in pools, and when one person gets sick the fees are covered by everyone else. Wouldn't it be better if EVERYONE was in the pool? I know, I know, 'I'm watching what I eat and I exercise, why should I pay for unhealthy people to have healthcare?'. My answer to that is, you already are. Hospitals serve uninsured people everyday and they write it off in taxes, basically ensuring that each tax payer is ultimately paying for these 'free' services. Health insurance gets cheaper the bigger the pool of people is, shouldn't that mean we have national insurance. Also, think about how an insurance company can make money, only by paying out less than expected or by charging more than necessary. Sounds like a prime candidate for public service when then only way to be profitable is to harm consumers.
The Republican Hole / social services: If you've read this far.... So, I don't understand the republican position on abortion and social welfare in general. Many republicans are against abortion. This seems foolish when you think about them being also against social programs. So, they're staunchly against a person aborting an unplanned child, while at the same time trying desperately to ensure that the person raising that unwanted child receives as little public money as possible, probably ensuring the child becomes a criminal. They constantly advocate for the discontinuation of social programs, while simultaneously advocating that women not be allowed to choose whether or not they have to give birth. If you approach the issue of social welfare rationally, you come to a decision between supporting people who don't work, or letting them die in the streets in front of you. My problem with republicans is that they want to whine and complain all day about people taking advantage of the system, people getting food for free or people having an apartment subsidized. Get over it. The issue is, these republicans aren't ready to watch these poor people and immigrants die in the streets. They have no problem chastising these people and voting in every way for cutting all aid to these people, but, all they're doing is starving these people and ensuring that we never actually fix the real issues that create these situations. All that to say, I'm for solutions. If researchers tell me that legalizing weed and granting clemency to all non-violent offenders will cut our prison bill in half while not increasing the risk to society of violent acts then I'm gonna do it.
Trade agreements: yes
LGBT: If you don't like gay marriage, marry someone outside of your gender. You can brainwash your kids all you want, unfortunately, but some day they're going to be citizens out here and we need people to know that gender and sexual choices are a right except in the case of children who are not able to competently decide for themselves. Banking: I think banking is completely necessary in today's economy, and also ripe for corruption making the industry ripe for nationalization. Banking is the transactions that we all make everyday, the money we save for retirement or college for our children, banking is the foundation of all consumer activity and we are a consumer based economy. The incentives for banking point to gambling with your money, which can lead to an economic meltdown. I think that 'regular' banking, the kind the 99% participate in, should be provided and run by the government with all records being available to the public. Investment banking needs to be a sport for the rich, not to be done with the money of the middle class.
I think at this point I've been more open and candid about my plans for the presidency than either Hillary or Drumpf, why don't they ever speak candidly?
Edit: Spacing

Australia

• Pay tax at marginal tax rates on your taxable income.
• Taxable income = assessable income - deductions
• Assesssable income is composed of ordinary income (income according to ordinary concepts) and statutory income (income defined under our 2 primary income tax acts)
• You can deduct amounts incurred in gaining/producing your assessable income unless the amount is private in nature, capital in nature, or is made non deductible by the two main tax acts. You can also deduct specific deductions (deductions prescribed by the tax acts).
• Australia also has capital gains tax.

If you have any questions, ask away.
USA
US seem to have a lot more taxes, and more complexity in your tax system, can somebody give me a little bit of background to the US tax system?
Taxpayers in Australia generally only have to file 1 income tax return, whereas in the US you appear to need to file federal, state etc and there seems to be a lot of talk around multiple different forms (e.g. 1099). What are the main requirements for lodgement, and what forms are the most common.
I know in the US that you are taxed on things like gambling wins (and a recent reddit article about gambling losses), and i have heard that you get deductions for things like mortgage payments. Are there any other peculiarities/differences that you know of?
The reason i'm asking is that i'm looking at working overseas for a while and am wondering how transferable my Australian skillset would be, and also whether i'd be able to pick up the US tax system fairly quickly.