Won Big At The Casino? All About The Tax Form You're About To Receive
Gambling is a fun pastime for many Americans, and the hope is always that you'll win it big. But when you do win, you'll have to deal with the tax consequences. This usually starts with a form called Form W-2G. Here's what you need to know about it.
What Is Form W-2G?
Form W-2G is simply the designated IRS information form that reports winnings from gambling. The organization that pays out the winnings makes the form, so you have no choice about whether or not you receive one. It may come after the calendar year has ended, but you may receive the form when you win. It's an important tax form, so protect it. Keep in mind that the IRS also gets a copy.
What Information Is Important?
What exactly does Form W-2G provide? There are a few key boxes to look for. The most important, of course, is how much you won (listed in Box 1). In general, this amount is already reduced by the amount of your wager, if applicable. Details about the win are also provided, such as the date and who paid out.
The other places to note are Box 4, Box 15, and Box 17. These boxes list any amounts which were withheld from your winnings by the organization and sent to the tax agencies. Some types of winnings have mandatory tax withholding requirements set by the IRS or state agencies. This amount lessens your remaining tax obligation.
What If You Don't Get Form W-2G?
As mentioned, the winner has no control over getting Form W-2G. So, what if you don't get one? The IRS and state tax agencies consider each taxpayer responsible for reporting their own income correctly—regardless of what forms they do or do not get. So use your own records to report taxable winnings on your tax forms.
However, some winners may receive a different form instead. This is commonly Form 1099-MISC. It looks different but generally provides much of the same information.
Where Should You Take Form W-2G?
Now that you received your winnings and Form W-2G, what should you do with both? The answer is to take your form to a qualified tax preparation service in your state.
Do this before you spend those winnings. Nearly all types of gambling wins are taxable in the United States, so you should care for this obligation before you spend the money. Your tax preparer will advise you on things like estimated taxes and the effects on your overall tax percentage for the year.
Make an appointment with a local tax preparation service today to learn more.