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Taxes on Gambling Winnings: What U.S. Taxpayers Need to Report

You must report gambling winnings on your federal return even without Form W-2G. Casual gamblers can deduct losses only when itemizing, up to reported winnings, and with records.
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For U.S. federal income tax, casual gamblers must report all gambling winnings—even if they did not receive Form W-2G. Cash and the fair market value of noncash prizes count. Gambling losses may be deducted only if you itemize, only up to the gambling income you report, and only when you have supporting records. State and local rules can differ.

What gambling winnings must you report?

Casual gamblers report all gambling winnings on Form 1040 or 1040-SR using Schedule 1, whether or not a payer issued Form W-2G. The IRS includes lottery and raffle prizes, sports betting, horse races, and casino winnings. A prize does not have to be cash: report its fair market value, such as the value of a car or trip. See IRS Topic 419.

Form W-2G is an information and withholding form, not the test for whether income is taxable. Not receiving one does not make a win exempt from reporting.

Can you deduct gambling losses?

If you are a casual gambler, you may deduct gambling losses only if you itemize deductions on Schedule A. The deduction is limited to the gambling income you report; losses cannot create or increase a gambling-loss deduction beyond that amount. You need records of both winnings and losses to support the deduction, as explained in IRS Topic 419.

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What records should you keep?

The IRS calls for an accurate diary or similar record and supporting evidence such as receipts, tickets, statements, or other records. Keep enough detail to connect your claimed winnings and losses to the underlying activity.

  • Record the date, venue or platform, and type of gambling activity.
  • Note amounts won and lost, and retain the related tickets, receipts, or account statements.
  • Store records so each entry can be matched to its supporting document.

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When does a payer issue Form W-2G or withhold tax?

Form W-2G reporting and withholding depend on the game, amount won, and generally the relationship between winnings and the wager. There is no single dollar cutoff that applies to every kind of gambling. The IRS’s Form W-2G guidance describes the category-specific rules.

For payments made in calendar year 2026, the January 2026 Instructions for Forms W-2G and 5754 set $2,000 as the minimum threshold for reporting certain payments and backup withholding on information returns, including Form W-2G. That is a minimum for certain rules—not a universal W-2G threshold. Game-specific conditions still matter.

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For certain specified winnings, the 2026 edition of IRS Publication 505 describes regular federal withholding at 24%, generally for specified lottery, sweepstakes, wagering-pool, and other wagering proceeds above $5,000, subject to category-specific conditions. Bingo, keno, and slot-machine winnings are generally not subject to regular withholding, although backup withholding may apply in certain cases.

Withholding is a prepayment, not necessarily your final tax bill. If tax is withheld, the W-2G should show the winnings and amount withheld; report that withholding with your other federal income tax withheld. Your eventual tax due can be higher than the amount withheld. Depending on your situation, you may need estimated tax payments, and inadequate withholding or estimated payments can result in a penalty. See Publication 505.

What if you collected winnings for a group?

If you collect winnings for a group, or the person paid is not the person who actually won, Form 5754 lets the recipient provide the payer with information about the people entitled to the winnings. The payer uses that information to prepare Forms W-2G for the listed winners. The collector should not automatically treat the full amount as their own winnings. See the IRS guidance for Form 5754.

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Does the rule change for professional gamblers or nonresident aliens?

Trade or business activity

The casual-gambler instructions do not automatically apply to someone in the trade or business of gambling. IRS Publication 17 (2025) directs a person in that trade or business to report gambling income and expenses on Schedule C. Whether a particular person qualifies depends on their circumstances.

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Nonresident aliens

U.S.-source gambling winnings can be subject to different rules for nonresident aliens. A nonresident alien with a filing obligation generally uses Form 1040-NR and Schedule NEC; nonresident aliens who are not residents of Canada generally cannot deduct gambling losses. IRS Publication 515 (2026) describes general 30% withholding on certain U.S.-source gambling income and exceptions, including specified nonbusiness casino games. Because the rules are specialized, do not apply the resident-casual-gambler guidance to a nonresident’s situation without checking the applicable IRS rules or getting tax advice.

Do federal rules cover state and local taxes?

No. The rules above describe federal income tax guidance; they do not determine how your state or locality treats gambling winnings or losses. Check the tax agency for your state and locality or consult a qualified tax professional about those rules.

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