Form W-2G: Certain Gambling Winnings, Guide, and Filing How-to's

What Is Form W-2G: Certain Gambling Winnings?

Form W-2G is an Internal Revenue Service document that a casino or other gambling establishment sends to customers who had winnings during the prior year that must be reported as income to the Internal Revenue Service (IRS). Its full title is Form W-2G, Certain Gambling Winnings.

The form contains information that the taxpayer needs to file taxes for the year. It includes the total amount of winnings, the date or dates they were won, the type of wager, and how much federal and state income tax has already been withheld.

All gambling winnings are taxable but only some gambling winnings are recorded with a Form W-2G.

Who Can File Form W-2G: Certain Gambling Winnings?

Under Internal Revenue Service (IRS) rules, you must report winnings from any type of gambling activity—including lotteries, racing, bingo, sports, slot machines, and card games—no matter how much or how little you won. This includes any money won in a foreign country. 

Gambling facilities are required to document your winnings with a Form W-2G under certain circumstances:

• $1,200 or more in winnings from bingo or slot machines
• $1,500 or more from keno
• $5,000 or more from poker tournaments
• $600 in winnings from other types of gambling, if the payout is at least 300 times the amount of the wager

Certain types of games, notably games of skill, do not have to be recorded with a W-2G but the income is taxable nonetheless.

Winnings are calculated by subtracting wagers or buy-ins from the final payout.

How to Use Form W-2G

If you're sent a W-2G and don't report the winnings, you'll eventually receive an IRS Notice CP 2000 ("Underreported Income") in the mail. That letter will provide information about the apparent discrepancy and detail the steps you need to take to resolve the issue.

Even if you don't receive a W-2G, you're required to report your gambling winnings as income. It's important to keep documents such as wager statements and payment slips any time you gamble. Those documents will also help verify the accuracy of the information on any W-2G forms you receive.

You may receive W-2G forms from more than one gambling facility. If that’s the case, you must report the amounts from each form individually.

Special Considerations When Filing Form W-2G

Depending on how much you win and the type of game, the gambling establishment may have withheld part of your winnings to cover federal income taxes.

The amount already withheld for federal taxes is noted in Box 4 of Form W-2G. State and local tax withholdings are recorded in Boxes 15 and 17, respectively.

There are two types of withholding for winnings from gambling: regular and backup.

Regular Withholding

The gambling facility is required to withhold 24% of your winnings from cash payments when the winnings minus the wager total $5,000 or more. This is known as regular withholding.

Regular holding applies to winnings from:

• Sweepstakes
• Lotteries
• Wagering pools
• Other wagers (if the winnings amount to at least 3,000 times the amount of the wager)

The rate is 24% for non-cash payments as well, if the winner paid the withholding tax to the gaming or lottery sponsor. The rate goes up to 31.58% when the payer contributes the withholding tax.

Backup Withholding

Payments for bingo, slot machines, keno, and poker tournaments may be subject to backup withholding, which is also 24%.

Backup withholding is made when any of the following occurs:

• The winner didn't provide a correct taxpayer identification number (TIN) to the gaming facility.
• The regular withholding for gambling wasn't made.
• The winnings total at least $600 and at least 300 times the wager (or at least $1,200 from bingo or slot machines, $1,500 from keno, or $5,000 from a poker tournament).

You Could Still Owe Taxes

Depending on your federal income tax rate, the amount of the withholding may not be enough to cover your federal income tax liability. There are three tax brackets above the 24% that is regularly withheld from gambling winnings.

You may owe less or even get money back if your total income falls below the 24% rate.

In addition to providing information about federal income tax withholding, the W-2G also contains information about any state and local taxes that were withheld.

That will be helpful when filing taxes in a state where gambling winnings are taxed.

Can You Claim Gambling Losses?

You cannot report your net winnings—that is, your winnings minus losses—on your tax form.

However, you can list your gambling losses as an itemized deduction on Schedule A in order to reduce your tax liability.

You may not, however, report losses in excess of your winnings. You cannot deduct other expenses you may have sustained in the process of gambling, such as transportation and hotel charges.

If you think there’s a chance you may itemize your taxes, you'll want to keep any receipts or other documents verifying your gambling losses.

All versions of Form W-2G are available on the IRS website.