Form W-2G Basics
Form W-2G, is the form gambling establishments use to report your winnings as income to the IRS. In this article, we will go over the basics of what is involved if you receive Form W-2G.
First, you must get familiar with what is on Form W-2G. In boxes 1 and 2 you will find your total winnings and the date(s) of those winnings. Box 3 specifies the type of wager the winnings came from. Box 4 specifies how much if any, federal tax was withheld. State income tax withholdings can be found in Box 15.
When You Will Receive a Form W2-G
All gambling winnings must be reported to the IRS, but only certain circumstances will generate a Form W2-G. These include the following:
- $1,200+ winnings from bingo or slots
- $1,500+ from Keno
- $5,000+ from poker tournaments
- $600 from other types of gambling only if the payout was at least 300 times the amount wagered.
It is good practice to keep your wager statements and payment slips to verify this reported income on your Form W2-G.
Taxation and Withholdings
The amount of federal taxes withheld from your winnings will be listed in Box 4. Any state withholdings will be in Box 5. There are two types of federal withholdings you may be subject to. The first type is regular withholdings. 24% of your winnings will be withheld if you win $5,000 or more at sweepstakes, lottery, or wagering pool. The second kind is backup withholdings. These are also 24%. You are subject to them if you win more than $1,200 at bingo or slots, $1,500 at keno, or $5,000 at a poker tournament.
You may owe more or less than 24% on your yearly tax return, depending on your bracket. It is important to note you cannot report net winnings. Which would be your losses subtracted from your winnings. However, you can deduct losses as an itemized deduction on your Schedule A. But they cannot exceed your winnings.
It is important that you properly report Form W-2G earnings. If you are not sure how to do so, contact a tax professional that can assist you.
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