Do I Have to Pay Tax on Gambling Winnings in New Jersey?
Yes, all residents in the USA may have to pay taxes on any winnings they get from gambling, depending on the amount won. The way taxes are handled also depends on whether you’re a professional player who makes their primary income through gambling or if you’re someone playing for fun and just happened to win big.
Taxes for normal players
Regular players primarily play for fun, and their income doesn’t come from casino gaming. This is the category most of us would fall into. Generally, you may be subject to a 24% withholding from the casino, depending on the amount you won.
Note that the 24% is just the initial withholding amount. When you file your taxes, you may end up paying more, or you may also get a return. The amount you may pay later depends on your overall income.
It’s important to keep track of your losses too. For example, if you won a total of $1,100 but also lost $1,100 to get there, you may not have to pay any taxes on that amount.
This also varies between slots, table games, and other games. We’ll talk more about specific games later on, as well as different forms that may be needed.
Taxes for professional gamblers
If you’re a professional gambler, then what you win from casino gaming and tournaments is your income. In this case, you would report your total amount won each year when you file your taxes. The tax amount would depend on your income level, as with any other job.
How to Report Your Winnings in the USA
The IRS (Internal Revenue Service) is the agency responsible for processing all taxes in the US. For more information about the IRS, check out their main page: https://www.irs.gov/
Let’s look more at the steps and forms that may be needed to report your winnings. At the time you win at the casino, the payer (in this case, the casino itself) is required to issue you a Form W-2 G. Information that needs to be reported here includes the type of game, the amount won, and the ratio of the payout to the wager placed.
There’s also Form 1040 and 1040-SR, which you must be aware of. 1040-SR can be used if you’re 65 years or older. On this form, you have to report your winnings from gambling as “other income.”
What Amounts Need to Be Reported in the USA
The amounts that need to be reported to the IRS are not always the same, and it largely depends on which game you won the money on. For example, slots, poker, and sports betting have different levels where you’ll be taxed.
Starting with the table below, we’ll provide a quick summary and then explain more about each game type in more detail. Additionally, if you win 300 times your wager, it has to be reported even if it’s below the amounts.
| Type of game | Starting amount to declare | % |
|---|---|---|
| Slots | $1,200 | 24% |
| Poker tournament | $5,000 | 24% |
| Game of Chance | $1,200 | 24% |
| Game shows | $1,200 | 24% |
| Sports betting | $600 | 24% |
| Keno | $1,500 | 24% |
Slots
Slots are probably the most popular and widely played casino games. Part of this is because there are endless variations and themes and they’re incredibly simple to pick up. For tax purposes, they fall under the larger category of games of chance.
| More than $1,200 | 24% |
How much money is that?
Let’s look at an example to see how much money you may pay. If you won $1,500 from slots, it’ll be subjected to a 24% withholding by the payer. This means $360 of it will be the taxed amount, and the winnings you receive will be $1,140.
Poker tournaments
Poker, as well as other table games, are considered games that involve some skill. In other words, they’re not considered games of chance purely. As a result, the amount you can win from poker tournaments before paying taxes is far higher, $5,000. It’s not exactly why the IRS makes these distinctions, but that’s how it is.
| More than $5,000 | 24% |
How much money is that?
As with slots, the tax rate is still 24%. Let’s use the minimum of $5,000 as an example. If you won that much, then 24% would equal $1,200. That’s the amount that would be paid out to the IRS and you would receive the rest, which is $3,800.
Games of chance
Games of chance refer to games that are purely based on luck. We already covered slots, and bingo is another game type that would fit here.
| More than $1,200 | 24% |
How much money is that?
24% is almost a quarter of your winnings. If you won $1,200, then 24% would equal $288. $288 will be deducted, and the full amount you receive would equal $912.
Game shows
Game shows are a newer type of casino game. They can offer an exciting experience, and no two game show experiences are alike. These games are part of the live casino section. Where gambling taxes are concerned, $1,200 in earnings is where you’ll be subject to withholdings. We can see it’s the same amount as other games of chance.
| More than $1,200 | 24% |
How much money is that?
As an example, you won $1,400 from game shows. 24% of that would equal $336. That means in the end, the total winning that you receive would be $1,064.
Sports betting
Although sports betting is largely a game of chance, it fits into its own category. The amount at which winnings are taxed is lower for sports betting than anything else. If you win at least $600, you’ll be subject to the 24% gambling tax.
| More than $600 | 24% |
How much money is that?
Let’s look at a sample calculation to see how much money you would have to pay. If you won the minimum amount, 24% is deducted before it’s awarded to you. That means $144 is paid to the IRS. The actual amount you would receive of the $600 is $456.
Keno
The final casino game we’ll look at is Keno, which has its own minimum taxable amount. In this case, if you win $1,500 or more, you’d likely be subject to a gambling winnings tax.
| More than $1,500 | 24% |
How much money is that?
For our calculation, we’ll consider the minimum amount of $1,500. 24% of this would equal $360. This means the actual amount paid to you would be $1,140.
Conclusion
Unfortunately, gambling winnings, like many things, are subject to taxes. Regardless of which game you won at, you’re subject to a standard 24% withholding tax. The amount that you can win at different games varies, though, so be sure to double-check our tables above.
For some players, though, they may end up having to pay even more. This will depend on various factors when you file your taxes later on. However, it’s possible you may even get some of that initial 24% back. Ultimately, there’s no escaping the gambling tax, and it’s best to try and learn about it as much as possible.