What Happens if I Don’t Report My Gambling Winnings?
Different countries have different fiscal laws, but they all agree on one basic principle. You must report all your income, whether this is your salary or gambling winnings unless exempted by law. Yet, many people try to figure out if there is a way to work around this to maximize their profits. Whilst in fear of the ramifications of doing so, you’ll commonly see players on forums specifically asking “what happens if I don’t report my gambling winnings?“.
Well, the answer depends on the jurisdiction, but any income, gambling winnings, or otherwise, that a financial regulator determined that you have failed to report will be taxed and levied with interest. In other words, you want to pay your gambling winnings tax on time, although some people will not let the law stop them.
Consequences of Not Claiming Casino Winnings on Your Taxes
The answer to this question depends on several things. For the most part, you will have to take into consideration the amount you have failed to report, your overall earnings, as well as your overall tax history.
Simply put, there is no immediate legal outcome if you fail to report your gambling winnings. Your tax office probably won’t bother if you have won and failed to report anything below $1,200. This, however, doesn’t mean that if you consistently win and fail to report your winnings the tax office wouldn’t notice. As with all other government institutions, tax authorities are overworked and too busy to bother with a momentary blip on their radar.
If you continue to win and do not report your winnings in your annual 1040 form, assuming you are from the United States, then you can expect a visit from the Internal Revenue Service (IRS). At the very least, you will receive a cordial letter from the IRS notifying you that there has been a small discrepancy on your 1040 form, asking you to edify it within an allocated period.
In theory, you could ignore the IRS letters for a while but they will have more insistent and at one point you may be summoned in court or receive a penalty for failing to comply with tax law. Overall, there is no way that you can avoid paying tax on your income and if you do try to stray from the straight and narrow, you may get in trouble with the tax office, and this time for real.
How Much Can You Win in a Casino Without Paying Taxes?
Financial taxation is a self-correcting ecosystem. If you have just won big and decide to buy a car without declaring the money, your car dealer will have to do that for you. In other words, the government will always find about your income and definitely know if you have paid tax on it.
Some people find this reassuring as this way you can never go wrong on your tax return with the government looking over your shoulder. Others find it a little more disturbing naturally. To come back to the original question, “how much can you win in a casino without paying taxes”, there is no such amount in theory. You don’t have to fill out a W-2G form in the casino for specific sums. A W-2G form isn’t necessary in cases where:
- You have won no more than $1200 on slots
- You have won up to $5,000 from poker
However, if your winnings exceed these amounts, the casino may fill out a W-2G form for you, which you then have to submit to the IRS, although, in theory, the casino is supposed to submit the form, and they do. To be on the safe side, though, most accountants we have asked recommend that you always submit your won taxes on the 1040 form for full transparency.
How Much Tax Do You Pay on Gambling Winnings?
Interestingly, the gambling tax may vary a little depending on the situation. The federal gambling winnings tax is fixed at 24%. However, if for some reason, you have failed to provide an ID, you may have to pay 28%. Now, this rate may vary slightly based on some recent changes in legislation.
However, the good news is that as long as you play at licensed and reputable casinos, especially in Atlantic City and on the Las Vegas Strip, you can expect everything to be nice and proper with all tax-related activities.
It’s good to know that some winnings over $5,000 are subject to income tax withholding instead. The amounts that will be levied with an income tax must originate from:
- Sweepstakes (such as prize pools from poker tournaments)
- Wagering pools (factoring any payments won from lotteries)
- Any other type of wager (if the amount won exceeds the bet amount 300 times)
Another interesting scenario is when you win a non-cash prize. Now, while a casino is happy to honor a non-cash award, you must know that you are responsible for paying tax on this, whether it’s a car or some other prize based on the objective market price of the item.
Can I Use My Gambling Losses to Deduct Tax?
Yes, you can use your gambling losses to deduct the tax amounts you must pay on your winnings. However, these deductions may not exceed the amount you have won in the first place. One thing to keep in mind is that it’s best to report your winnings and losses generated through gambling separately.
The good news is that all gambling losses are reported on Schedule A and aren’t subject to the usual 2% limit. It’s important to make sure you have the right habit of keeping track of your gambling winnings and losses. The IRS would expect you to keep the original or a copy of your payment slips, receipts, tickets, and W-2G forms.
After finishing her master's in publishing and writing, Melanie began her career as an online editor for a large gaming blog and has now transitioned over towards the iGaming industry. She helps to ensure that our news pieces are written to the highest standard possible under the guidance of senior management.
22 Comments
If over several years (maybe 8 years), W2G’s won in a Oklahoma Casino have an accumulation of $92,000 in which W2G’s were received and Federal Taxes were paid as Other income on a 1040… At the end of the year losses were more than gains from the casino year end statement and entered as other income on Federal level as a loss.. Does Oklahoma still receive taxes separately. If so, when did this begin? The Casino does not offer any help other than pay the money, give you a W2G then leave. They tell people they are “not tax people”. nothing about taxes said. Almost everyone knows that you must pay Federal Taxes but State Taxes? Tax people offer no help other than tell you to put it on your 1040. So, if one should owe taxes how would you fix this? Live in Texas. The casino said, they get all their info from the 1040. So where do you go and what do you do with lack of information. In other words does one owe taxes to the state of Oklahoma or not? Very confusing situation for anyone to be in.
Would I be taxed for winning a 2300 jackpot
Yes! You would owe taxes to the State of Oklahoma even though you’re not a resident there, but that’s where the (taxable) income was won. I have been winning BIG there since my first haul in 2010 on the slots. (I won 9 jackpots in 4 hours all over $1199 so it was all taxable). They give you the option of paying the taxes right then or not. I have always chosen to have my taxes taken out of my winnings because I do not want to have to pay at the end of the year because I’m disabled. Whether or not you choose to pay right then or not, they will provide you with the W-2G tax form and they will also mail you a 1099.
I have always ended up getting a tax break because even though I won the money in Oklahoma, I’m a resident of Texas and I’ve always received anywhere from $600 to $3,000 back on my tax return. Normally I wouldn’t file a return again because I’m disabled and SSI money is not taxable, but because it’s winnings it’s considered “extra income/winnings” so you have to form a tax return.
Hope this helps at least a little bit from the knowledge that I have.
Ok, so does SSI take your winnings? Or find out? As I’m on SSI and I had the casino take the taxes out of my winnings… and I don’t file taxes either, so now what? Call SSI And have them take it? I’m so confused
Mars wifey I was wondering if you are on disability does gambling winnings hurt your eligibility for SSI or Medicaid? I’ve recently been put on disability and afraid showing winnings will knock me off my Medicaid eligibility when I add that income to my disability income. Thanks for any info!
I am no tax person bur you are required to report your winnings within 30 days and it could offset your ssi payments by the dollar amount you have won until caught up with the winnings
Not fair to be taxed on half of social security for gambling winnings. When my losses were more then winnings. Yes you can write off losss up to winnings. But you still get taxed on half of social security
I won $8,000 on Kentucky Derby and casino took out $800 in Maryland taxes and gave me a small piece of paper showing I paid. I have not received any forms from Md. do I have to declare it on my federal as well as my Maryland state forms. What if Md. never received my payment I made to Casino.
I won $1,458 today and I told them not to withhold the tax money. What happens if I just don’t file my taxes and just ignore the IRS? Will I get arrested? What will they do to me?
Eventually they’ll catch up to you through audit or casinos tax reporting and charge you the tax plus interest on that money you won with money you already paid taxes on
What if you win a large amount of money in Vegas, get W-G on vacation. Live in Michigan, how to avoid paying tax on win when it never returned to MI?
How can you amend your tax return to reflect the correct wins/losses from a previous year? If they equal each other do you still have to pay?
What happens if I won 20k at casino if I don’t report and over 6 months I want to report what will happen will they catch on right away
I also got a few 1099 for gambling, I got out of hand a bit and I feel my losses are way more than my Winning. Do I still have to pay tax’s on this ? Thy don’t send you a win and loss form.
How much would I get tax if I won 3600
If I lost more then I won do I have to report it on my taxes?
Won just over 3000 this year in online football bets should I claim that?
My husband is on SSI and won 15.000 at the casino and had taken out taxes giving him 9000 total then they kept that for fines and child support. Is that legal? We don’t know how much child support or fines are owed.
I’m on disability Ssdi. I ended up getting addicted to gambling. I’m so afraid of losing my benefits that I’ve contemplated suicide. I don’t sleep eat or even concentrate. I’m just petrified. I’ve taken out so many short-term loans and payday loans to pay for my gambling. I don’t know what to do. I’ve received a 1999k form. I’m scared and suicidal. Please help
I was addicted to gambling not too long ago. I know the feeling.The casino is not worth you taking your life. The casino wins if you do that. Please if you need someone to talk to please call or text the suicidal hotline at 988 . You are worth so much more. It is so selfish to take your life and make your family live in misery because of your selfish decisions. Please dont do that to your self and your loved ones. I will be praying for you.
Why would you lose your benefits from gambling? Did you have payouts? Even if you did you still wouldn’t lose your benefits. If you think you need help with your money so you don’t gamble it away you should request to have a payee. Also nothing is worth committing suicide over especially money. This situation is only temporary. Suicide and committing suicide is forever! Hopefully this helps.
Won a major jackpot of over $200K at the local casino. Now at tax time, I find out that the IRS has no report of the winnings and NO taxes were paid. I signed my papers and $80K was taken out right off the top for federal and state taxes. The casino shows that the jackpot was never won. The game wasn’t owned by the casino it was a progressive from EVERI. So the company Everi paid my winnings to me. The casino I won at doesn’t even recognize there are winnings or paperwork. But yet they put me on the Facebook page and billboard down the interstate. Crazy Huh?
Went to have taxes done and they are saying I owe $60K. I know this sounds crazy but this can really happen. The company was supposed to send via email all the forms I signed at the casino. Explained to me that once everyone in charge signed they would forward my paperwork. Yet not received. It goes on and on. No one will return phone calls and I am missing exactly what they took for taxes. After researching everything I feel the casino is at fault.
Does anyone have any ideas? Contacting an attorney? I have most definitely thought too. I feel like I am being made of as a joke. Everyone involved I feel like is laughing at me telling me some crazy story. Please someone tell me what I need to do. Because I’m not going to pay another $80K in taxes. the amount missing is the 25% of the $200K plus that I won. Kansas Laws?