Welcome to the Hymotion news site!

Join & write to build impactful stories

Today: December 29, 2023

9 months ago
0 views

How Much Taxes Do You Pay on Slot Machine Winnings?

how much taxes do you pay on slot machine winnings

Are you wondering how much taxes do you pay on slot machine winnings? Most people don’t think about taxes on their trip to the racetrack or casino, but what appears to be nothing more than a chance to earn some additional cash has some tax ramifications. 

As is typically the case, federal and state governments target casino gains for additional taxes. Well, we will explain more about taxes before you join the gambling world. 

How Much Taxes Do You Pay on Slot Machine Winnings Actually? 

If you win when playing Dragon slot machine, the payer must issue you a Form W-2G:

  • $600 or more if the wager is at least 300 times the amount wagered (the payer has the option to lower the winnings by the wager)
  • $1,200 or more in bingo or slot machine winnings (not lowered by your wager)
  • $1,500 or more in keno winnings (after wagering)
  • More than $5,000 in poker tournament wins (after deducting the wager or buy-in)
  • Any winnings that must be withheld from federal income taxes

If you report your wins on a Form W-2G, federal taxes are withheld at a fixed rate of 24%. The withholding rate is also 24% if you did not provide the payer with your tax ID number. Withholding is needed when the gains, less the stake, are as follows:

  • More than $5,000 in winnings from sweepstakes, wagering pools, lotteries, etc
  • At least 300 times the bet amount

You should get a copy of your Form W-2G, which shows how much you won and how much taxes do you pay on slot machine winnings. Include your winnings on your return even if you don’t obtain a Form W-2G.

how much taxes do you pay on slot machine winnings

The Losses Might Be Deductible

After figuring out how much taxes do you pay on slot machine winnings, you still have to know one thing. Did you have a terrible blackjack night or pick the wrong horse to win or while playing Triple Diamond slots

If you lose a bet or two, there may be a silver lining: your gambling losses may be deductible. (Gambling losses also include actual cost of bets as well as other expenses such as transportation to and from a casino or other gambling institution.)

However, there are a handful of important limitations. To begin, unless you’re a professional gambler (more on that later), you must itemize to deduct gambling losses (itemized deductions are filed on Schedule A(opens in new tab)). Regrettably, the majority of people do not itemize. 

Consequently, if you take the standard deduction, you’re out of luck twice: first because you lost your bet and again because you can’t deduct your gambling losses.

Second, you cannot deduct gambling losses that exceed the earnings reported on your tax return. For instance, if you won $100 on one bet but lost $300 on others, you can only deduct the first $100 in losses. You cannot deduct any of your losses if you were completely unlucky and had no gambling profits for the year.

If you are a professional gambler, you can deduct your losses on Schedule C (opens in a new tab) as business expenditures without having to itemize. A word of caution, however: An activity is only considered a business if the primary goal is to create a profit and you are constantly and frequently involved in it. A business cannot be formed from sporadic activities or hobbies.

Final Words

After understanding how much taxes do you pay on slot machine winnings, the IRS recommends keeping a diary or comparable record of your gambling activities to help you keep a record of how much you’ve won or lost over the free slots with bonus and Free Spins of a year. 

Your records must include, at a minimum, the dates and types of particular bets or gambling activities, the name and address/location of each casino, racetrack, or other gambling place you attended, the identities of other people with you at each gambling site, and the sums gained or lost.