Don't you love how at the end of a losing session in Las Vegas or at your favorite online casino, you can reach out to the IRS for a 24% rebate on your total losses?
Oh, right… You can't. But you'd better believe that it works in reverse when Uncle Sam comes calling for his portion of your gambling winnings in the form of gambling taxes each year.
I'm not a tax professional, but I do file my own taxes every year. And I may or may not have waited until the last minute once (or twice). So if you are in a similar boat this tax season, I've got the answers to a few questions you might be asking about your gambling winnings and losses.
When Do You Receive W2-G Gambling Tax Forms?
In last year's World Series of Poker, I made a nice run in the $1,500 8-Handed Pot-Limit Omaha Bracelet Event, finishing in 47th place for $7,194. That was awesome! Being handed a Form W2-G and being asked if I wanted 24% of my profits withheld? Less awesome.
Naturally, I declined this withholding. I wanted my winnings now! I'd let future Dave deal with the taxes. And deal with them I did; when I added the W2-G to my income section on TurboTax, I watched in horror as my tax refund melted away and converted into a big deficit I was now due to pay off.
So why did I receive a Form W2-G after my poker tournament? Because with a profit of $5,694 ($7,194 total payout – $1,500 buy-in), I hit the $5,000 threshold that automatically triggers it. Winning thresholds in 2025 are as follows:
- 🐎 Horse Racing: $600+ AND 300x or more on your wager size
- 🎰 Slot Machines and 🔴 Bingo: $1,200+
- 🃏Poker: $5,000+
While Donald Trump's Big Beautiful Bill raised the slot machine threshold to $2,000, that goes into effect for the 2026 tax year, so the old thresholds still apply for those filing for 2025.
Do You Have to Pay Taxes on Gambling Winnings Not Reported on a W2-G?
Yes, gamblers are responsible for filing all gambling winnings as income using IRS Form 1040, even if they did not hit the threshold to receive a Form W2-G.
Though, unlike gambling wins that are reported directly to the IRS when one of the thresholds above is hit and a W2-G is generated, Uncle Sam is trusting you on the honor system here. I'm sure you won't let him down.
Can You Write Off Gambling Losses?
One of the most frustrating things I leaned about paying taxes on gambling winnings is that you are not allowed to write off gambling losses unless you itemize deductions on Schedule A (Form 1040).
Roughly 90% of Americans chose to take the standard deduction because it is easier than itemizing and in most cases, more profitable to do so as well. Unless you picked up a massive gambling win and have the losses to offset it, chances are you'll be better off taking the standard deduction, and that means foregoing the option to write off gambling losses.
If you are itemizing deductions and want to include your gambling losses, keep the following important notes in mind:
- ✅ Losses can not exceed reported winnings. You can write off up to 100% of your winnings in 2025 (this drops to 90% in 2026), but no more than this.
- ✅ Detailed records are required to verify gambling losses. These records should include a log of all gambling sessions, receipts, wagering tickets, bank statements, and casino win/loss statements.
- ✅ Excess losses (above winnings) can not be carried forward to future years.
What Should You Do if You Don’t Have the Money to Pay Your Gambling Taxes?
Even if you don't currently have the money to pay the IRS what you owe, it is always in your best interest to file your taxes anyway. In addition to it being illegal to skip filing them, it can also be very costly.
A failure-to-file penalty comes in at a whopping 5% per month on money owed. Filing correctly and failing to pay on time has a considerably less harsh failure-to-pay penalty of 0.5% per month, and that shrinks down to 0.25% per month if you are approved for an IRS payment plan.
I hope that you found this information helpful, and that you have plenty more casino jackpot wins in your future; even if that sadly means more gambling winning taxes, too.
