The W-2G form is a document prepared by the Internal Revenue Service to enable casino players to file taxes. The casino or the gambling establishment sends the form to the players/ customers who won money in the previous year. The winners need to report their income to the IRS. The form is named Form W-2G: Certain Gambling Winnings.
In this article, you will learn some of the essential details about Form W-2G, and you will also get an idea of the constituents of the form. In addition to that, we will also give you details about who can file Form W-2G. Finally, you shall also learn about how to use Form W-2G to file your taxes, along with some special considerations. Hence, to learn more about W 2G tax forms, read on through to the end of the article.
What Is W-2G Form?
According to Investopedia,
“The form contains information that the taxpayer needs to file taxes for the year. It includes the total amount of winnings, the date or dates they were won, the type of wager, and how much federal and state income tax has already been withheld. All gambling winnings are taxable, but only some gambling winnings are recorded with a Form W-2G.”
As per the Internal Revenue Service, every US Citizen needs to report all gambling winnings to the IRS, and those winnings are considered income. However, all the winnings need not be filled out in a Form W-2G. If you have won through lotteries, gambling, and other contests and want to report as “Other income,” you need to fill out Form 1040.
Who Needs To File Form W-2G?
If you have any type of gambling activity, you will have to report your winnings to the IRS. These shall also include bingo, racing, slot machines, lotteries, sports, card games, and more. No matter how much or how little you won, you will have to file your taxes with the IRS. This also includes any money you have won in a foreign country.
However, to document your winnings, the gambling establishment or casino needs to provide you with Form W-2G. Furthermore, this also applies to certain types of games that you play.
Here, according to Intuit TurboTax,
“If you receive multiple W-2G forms, you’ll need to enter the winnings for each of them when preparing your tax return. You are required to also report winnings even if the payer doesn’t send you a Form W-2G. Track your winnings by keeping accurate logs and receipts.”
If you have played some games that require skills, you need to worry about recording them on Form W-2G to the IRS.
How Can You Use Form W-2G To File Taxes?
According to Investopedia,
“If you’re sent a W-2G and don’t report the winnings, you’ll eventually receive an IRS Notice CP 2000 (“Underreported Income”) in the mail. That letter will provide information about the apparent discrepancy and detail the steps you need to take to resolve the issue.”
There can be a situation in which you did not receive Form W-2G from the gambling establishment. In such situations, first, contact the gambling establishment to send you the form. Then, you must consider keeping your wager statements and payment slips of all the gambling winnings that you made. With the help of these documents, you shall be able to verify the accuracy of the information that you provide to your Form W-2G.
Filing Form W-2G: Some Special Considerations
Based on what game you played or how much you won, the casino or the gambling establishment can withhold a part of your winnings to pay income taxes to the government. You need to note the amount they already withheld from you in Box 4 of Form W-2G. If there are further tax withholdings of state and local governments, you need to fill it out in Box 15 and Box 17, respectively.
If you want to withhold some of your taxes on winnings legally, you can do it in two ways:
1. Regular Withholding
The casino or the gambling establishment has to withhold 24% of your winnings from cash payments, provided that the winnings minus the wager is more than or equal to $5000. This type of withholding is known as regular withholding.
Here are some of the following places where regular withholding applies:
- Wagering Pools
- Other wagers (provided the winnings are at least 3000x the wager amount)
For non-cash payments, the withholding rate is also 24% if the gambling winner paid the tax withholding amount to the lottery/ gaming sponsor. If the payer contributes to withholding tax, the rate goes up to 31.58%.
However, according to Intuit TurboTax,
“If you failed to provide the payer with your Social Security number, your winnings will typically be subject to backup withholding at a rate of 24%, which the IRS collects from the gaming facility from the amount held back from your winnings.”
2. Backup Withholding
The amount is 24% for backup holding. This applies to payments related to slot machines, bingo, poker tournaments, and keno. This type of withholding applies in the following cases:
- If the winner did not provide the correct TIN to the gaming establishment or casino.
- The winnings did not go through regular withholding.
- The winnings were at least $600 and at least 300x of the wager (or at least $1,200 from slot machines or bingo, $1,500 from keno, or $5,000 from a game of poker).
No matter how much you won through gambling, it is fully taxable, and you will need to fill out Form W-2G compulsorily. However, one needs to fill out the form for certain amounts or more, and it is not applicable to every game. But, the winnings are subject to taxation as well.
However, you can even deduct in case of losses, but you will need to keep careful records of the same, and you will even have to itemize your taxes if you want to claim the losses. Do you have any more recommendations regarding the filling out of Form W-2G? Share your views with us in the comments section below.