How gambling impacts your taxes this year

(NEXSTAR) — Tax season is back. That means it’s time to report your previous year’s income again.

This includes all income, including W-2s, side gigs, illegal activities (yes, you have to report them), and gambling winnings, which is a potential new source of income for some. .

It looks like 2023 was a strong year for new and experienced gamblers. Commercial casinos across the United States have had their best year yet. $66.5 billion earned from gamblersAccording to the American Gaming Association.

When revenue statistics from tribal-owned casinos are released separately later this year, they are expected to show that overall casino gaming generated nearly $110 billion in revenue for U.S. casino operators in 2023.

“From traditional casino experiences to online options, the demand for gaming among American adults has never been higher,” said Bill Miller, president and CEO of the association. .

Many states are now starting to get into legal gambling, which has helped boost their success.

Anyone who made their first bet in 2023 will have to report it on their taxes, even if they lose.

When do I have to report a gambling win?

Mark Steber, chief tax information officer at Jackson Hewitt Tax Services, told Nexstar that gambling winnings are considered income, technically “other income,” on state and federal tax returns. Told. You must pay taxes on all winnings, no matter how big or small.

The type of gambling, the amount won, and generally the ratio of winnings to stakes will affect tax reporting and withholding. explain.you should receive For example, if you win more than $1,200 playing bingo or slots at a casino, or if you win more than $5,000 in a poker tournament, you will receive a W-2G.

“Even if a taxpayer uses a sports betting organization and does not receive a W-2G but has winnings, they are responsible for reporting that income on their tax return,” Steber said. “Examples of “other income” include, but are not limited to, money won at casinos, game shows, lotteries, and state lotteries. Winnings from foreign countries, including international gambling, are also taxable and must be reported on your federal tax return. ”

As Stever mentioned, lottery winnings are also taxed. If the payout is large enough, the IRS will automatically garnish his 24% of the winnings (unless you live in a state that doesn’t have a local lottery tax, the state will also garnish a portion of the tax). However, since the highest federal tax rate is 37%, I may still owe you money. Tax on jackpot.

What about gambling losses?

Winnings won through gambling cannot be reduced by losses.

But you can do it deduct losses Up to the winning amount on your tax return.

“Keep in mind that the standard deduction is very high and most people don’t qualify for it. So if you take the standard deduction and don’t itemize, you won’t be able to deduct your loss.” Jackson hewitt explain.

What if I pay taxes but can’t pay them?

Tax experts recommend filing your taxes early, whether you owe money or not.

The IRS can penalize you for not only not paying your taxes on time, but also for failing to file a return. According to the law, the taxes you owe are subject to interest and monthly late penalties. I.R.S..

If you can’t pay what you owe, the IRS recommends paying what you can and considering payment optionsincludes short-term and long-term payment plans.

The tax return deadline is April 15th of this year.

If you don’t get a refund this year, you might get one next year. In November, the IRS announced inflation adjustments to the tax code, including changes to the standard deduction and personal income brackets. The standard deduction is an amount that reduces the amount of your taxable income.

These will go into effect in 2024 and apply to tax returns filed in 2025. However, this change may already be reflected in this year’s salaries.

The Associated Press contributed to this report.