NEW YORK (TheStreet) – So you cleaned up at the casino, finally had that winning lottery ticket pay off or were the last person with his hand on the truck at the mall this weekend. What's that “free” gift going to cost you?
Only as much as you allow. As Los Angeles-based tax expert Elizabeth Rosen notes, any winning you get from playing the lottery, gambling in casinos, betting on races or even playing keno in the local pub are fully taxable. The IRS even designates a form, W-2G, just for this purpose. If you win, Uncle Sam wants his cut.
“If you go to Foxwoods or some other casino and you win $10,000, you're going to receive some type of tax reporting that requires you to pick up your gross gambling winnings on your tax return,” says Jared Feldman, partner at New York firm Anchin, Block & Anchin. “There are tax consequences to that.”
Basically, if you win $1,200 or more from a bingo game or slot machine, $1,500 or more from a keno game, $5,000 from a poker tournament or $600 or more and at least 300 times the amount of the wager anywhere else, your winnings are taxable. You are also required to withhold 25% of your winnings for federal taxes if they exceed $5,000 and are from lotteries, sweepstakes, pools or other bets in which you win 300 times the amount you wagered. This is all before state taxes come into play, but it's also before deductions.