- This simple question, like most tax-related inquiries, has a complicated answer. Gambling establishments withhold 25% of winnings for individuals who have a Social Security number on file and 28% for all others. Since these winnings are included in taxable income, the individual’s tax bracket ultimately determines how much is withheld.
- Gambling Income Tax Requirements for Nonresidents. Nonresidents can usually report income that is 'effectively connected' with a U.S. Business on Form 1040NR-EZ. Gambling winnings, however, are considered to be 'not effectively connected' and must generally be reported on Form 1040NR. Such income is generally taxed at a flat rate of 30%.
- Not all states allow gambling or run an official state lottery, although an increasing number of states is doing so as a way to raise revenue. The state of Kentucky, famous for its history of thoroughbred racing, has a robust system in place for wagering on horse races and harness racing. But the state does not permit casino-style gambling, not even on Native American reservations.
The information in this article is up to date through tax year 2019 (taxes filed in 2020).
Every year, people flock to casinos in hopes of hitting it big. And since sports betting has been legalized, more people are engaging in gambling than before.
There is a tax on gambling winnings of up to 6% in Kentucky. This is in addition to anything owed to the federal government. Out-of-state residents may receive a tax credit if paying the same amount or more in their home state.
One thing to be aware of, though, is that certain winnings are taxable and are reported on IRS Form W-2 G. This document outlines your gambling winnings from a specific establishment. They should prepare the form to send to you and the IRS.
How do I get my Form W-2 G?
It’s the gambling establishment’s responsibility to fill out and submit Form W-2 G to the IRS. The copy that you receive is for you to report on your tax return. If you haven’t received your W-2 G or you lost it, contact the gambling institution to get it reissued, or contact the IRS directly since they will already have a copy.
Do I have to pay tax on my winnings?
Ky Gambling Tax Exemption
Only winnings above a certain amount in certain games are reported on IRS form W-2 G. It is important to understand that “winnings” refer to the net amount. So, if you wager $1,000 and win $2,000, your winnings are $1,000.
Only winnings above a certain amount from specific games will be reported on form W-2 G. Those include:
- Slot machine and bingo winnings of $1,000
- Keno winnings equal to or greater than $1,500.
- Pokertournament winnings exceeding $5,000
- Any lottery or sweepstakes winnings over $600
- Any other gambling activity in which you won 300 times the wager
Are winnings withheld for taxes?
This simple question, like most tax-related inquiries, has a complicated answer. Gambling establishments withhold 25% of winnings for individuals who have a Social Security number on file and 28% for all others. Since these winnings are included in taxable income, the individual’s tax bracket ultimately determines how much is withheld.
Ky Gambling Age
Can I deduct gambling losses?
Ky Gambling Taxes
Yes, losses can be deducted – although you won’t receive IRS form W-2 G outlining losses. Keep records of your wagers and losses. They will be reported on Form 1040, Schedule A as “Other Itemized Deductions.” Be aware, though, that the number of losses which are deductible cannot exceed the number of winnings reported on your tax return.