Everybody loves to read stories about big winnings in the casino. Slot machines are a fun way to make money. Yet, they can also be a costly venture. However, have you ever wonder what happens after you hit the jackpot in a slot machine? Slot machine taxes vary depending on the state. Therefore, it is important to know what you are up against before playing.
What is gambling income?
It refers to any money generated from games of chance or wagers on events with uncertain outcomes. Gambling income includes cash and fair market value of any item that you win from betting. Thus, this generated income is taxable. By law, you must report all your winnings on your federal income tax returns. Read about the Gambling winning tax here.
What are the taxable gambling income?
Taxable gambling income depends on the number of your winnings. Thus, your gambling income include, but not limited to, money or prizes you earned from casino games and gambling activities like:
- Poker tournaments – for players that win $5,000 or more
- Keno* – for players that win at least $1,500 worth
- Slot machines*
- Game shows
- Betting pools
- Horse or dog races – when the winnings are 300x your stakes
- Off-track betting
- Bingo* – for players that wins $1,200 or more
*Winnings from Bingo, Keno, and slot machines may not be subjected to tax withholding. That is when you met certain circumstances. The winner may need to be provided with a social security number to avoid the withholding tax.
If winnings are not subjected to tax, you may have to pay the estimated tax instead. Furthermore, your gambling income is generally subject to a flat 24% tax.
What is slot machine taxes?
One of the very confusing aspects of gambling is slot machine taxes. This is due to the reason that it varies from state to state. Moreover, there is no national law that regulates slot machines. Rather, each state has its own set of rules.
Slot Machine Taxes in the USA
In the United States, when you hit a jackpot, you have an option of receiving the winnings. The casino can pay you in cold cash or cut you a check. For larger amounts of winnings, usually, casinos paid by check.
By law, the IRS only obliges the casinos to report winnings that are greater than $1,200. Thus, you need to show proper identification, be it a valid ID, driving license, or passport. While the casinos check your identifications, they also check your age. This is to make sure that you are legally old to gamble. However, the minimum legal gambling age varies from state to state.
So, before you visit a casino, make sure to check the allowable legal gambling age in that state.
In California, there are no slot machines taxes unlike in other states. For an instance, you may have to pay 10% taxes on slot machine winnings. By knowing this much, you won’t be surprised when you see the tax bill after your trip.
Do you have to report all your gambling winnings?
Yes, of course, you need to report all your gambling’s winnings as they are subject to federal taxes. By law, all gambling income is fully taxable – both cash and non-cash winnings. Therefore, when you won on a slot machine higher than $1200, the casino needs to report it.
Slot machine taxes in W-2G Form
In case you hit the jackpot, it is useful to know that casino must give you a W-2G Form. Here you need to list your complete name, address, and Social Security Number. After reporting your winnings, the federal withholding taxes will be at a 25% rate. Form W-2G is also issued to winners from other types of gambling activities.
How much tax do you pay on slot machine winnings when I failed to provide my tax identification number?
If you are not able to provide your Social Security Number, the withholding slot machine taxes will be 28%. Either way, you will be issued a copy of your Form W-2G. Hence, it should show the amount you won alongside the amount of tax withheld. The other copy will go to the IRS.
Therefore, not all gambling winnings are subject to IRS Form W2-G.
You have not required to fill out a W-2G form for any amount of winnings from table games. This includes games like Roulette, Baccarat, or Blackjack. Yet, you still need to report your winnings to the IRS, but not with this form.
Are my gambling losses subject to slot machine taxes deductible?
Of course, yes. All your gambling losses are deductible. You can report your previous losses from your slots’ winnings, yet, only up to the value of the said winnings. Here, you will be needing form 1040.
For an instance, you have won $300 playing slots. However, your previous loss is $500. Then, you can only deduct up to $300 off your losses instead of $500.
Slot Machine Taxes: Tracking Your Wins and Losses
You need to provide proof of any wins and losses when filing taxes on slot machine winnings. So, every time you win or lose, make sure to keep a record. Moreover, hang on to any losing tickets, credit slips, or cancelled checks. Moreover, the documents you are keeping back has:
- The amounts should be written on them
- Date and time
- Type of bet
- Type of gambling activity
- Name and address of the casino – if this is where the action took place.
Moreover, you can also list the friends you were with, in the event the taxman asks for further proof.
Slot Machine Taxes in the UK
Any gambling winnings are not taxable for residents of the United Kingdom. So, you can keep whatever amount you win from gambling. Then again, no matter how big or small you win playing an online slot, it will stay tax-free. That is as long as you live anywhere in the UK.
Do you pay tax on gambling winning in Canada?
For gamblers who live in Canada, you do not have to pay taxes for your winnings. Your gambling incomes are tax-free. That is, as long as the gambling activities do not fall under the category of a constant source of income. To simply put, you do not gamble to make a living. More so, Canadians do not pay taxes on their lottery winnings. Professional gamblers who make a living from gambling are obliged to pay taxes.
Slot machine taxes in Australia
For Australians, you are not required to pay slot machine taxes or any gambling taxes. This is due to the reason that:
- You are gambling as a hobby and do not make it as a profession.
- Moreover, the government does not see profits from any gambling activities as income.
- Casino operators and lottery organizers pay the taxes instead of the gamblers.
Online Slot Machine Taxes
Online slot machines are increasingly popular these days. It is important to note that ALL GAMBLING INCOME from anywhere in the world is taxable. So, whenever you win big on online slot machines, you still need to declare it on the Form W-2G. That is if the slot winnings are bigger than $1,200.
Slot Machine Taxes FAQs:
Yes of course, in the USA, an American citizen needs to pay slot machine taxes when they won $1200 or more. They have to fill out a W-2G tax form. If you are not able to provide a Social Security Number, your winnings are subject to 30% withholding tax.
In most casinos, the casino takes up to 25% off your winnings for the IRS gambling taxes before they pay you. It is important to know that not all amounts are subject to the W-2G form. Winnings on table games like Craps, Blackjack, Baccarat, and Roulette do not need W-2G forms.
Generally, all your gambling incomes are subject to the flat rate of 24% tax. Winnings over $5000 from sweepstakes, lottery, or wagering pools are subjected to income tax withholding.