Do You Get Taxes Back From Casino Winnings?

Winning money at a casino can be exciting, but it also comes with tax obligations. The IRS considers gambling winnings taxable income, meaning taxes may be owed on earnings. In some cases, refunds or deductions can offset these taxes.

Understanding how casino winnings are taxed and available refund options helps prevent overpayment.

Withholding Requirements

Casinos must withhold federal taxes on certain gambling winnings based on game type and amount. Slot machine and bingo winnings of $1,200 or more, keno winnings of $1,500 or more, and poker tournament winnings exceeding $5,000 require IRS reporting via Form W-2G. If winnings meet these thresholds, casinos may withhold 24% for federal taxes, especially when a Social Security number isn’t provided.

Table games like poker, blackjack, and roulette do not have automatic withholding, regardless of the amount won. Still, all gambling income is taxable and must be reported. Some states impose their own withholding rules. California does not withhold state taxes on gambling winnings, while New York applies a 10.9% rate for residents.

Potential Refund Claims

If taxes were withheld from casino winnings, some or all may be recoverable when filing a tax return. The IRS determines tax liability based on total annual income. If actual taxes owed are lower than the amount withheld, the excess is refunded.

For example, if a gambler wins $10,000 on a slot machine and has 24% withheld, they prepay $2,400 in federal taxes. If their total income places them in a lower tax bracket, they may qualify for a refund. In 2024, the 24% bracket begins at $95,376 for single filers and $190,751 for married couples filing jointly.

State tax refunds depend on local laws. Some states allow nonresidents to claim refunds, while others do not. Michigan permits nonresidents to file for a refund, whereas Pennsylvania does not. Checking state-specific rules is necessary when gambling outside one’s home state.

Offsetting Winnings with Losses

Gambling winnings are taxable, but losses can offset them under certain conditions. The IRS allows deductions for gambling losses, but only up to the amount of reported winnings. If someone wins $5,000 but loses $3,000, they can deduct $3,000, reducing taxable gambling income to $2,000. Losses exceeding winnings cannot be deducted or carried forward.

To claim losses, taxpayers must itemize deductions instead of taking the standard deduction. This is only beneficial if total itemized deductions exceed the standard deduction, which in 2024 is $14,600 for single filers and $29,200 for married couples filing jointly. If itemized deductions do not surpass these amounts, reporting gambling losses provides no tax benefit.

The IRS requires detailed documentation to support loss deductions. Acceptable records include wagering tickets, receipts, bank statements, or a gambling log tracking dates, locations, amounts wagered, and results. Casinos may provide win/loss statements, but these may not account for cash transactions outside tracked player accounts. Without proper documentation, deductions may be disallowed in an audit.

Nonresident Filing Factors

Winning at a casino outside one’s home state or country can create additional tax obligations. Many U.S. states tax gambling winnings earned within their borders, even for nonresidents. Some states, such as Indiana, Connecticut, and West Virginia, require nonresidents to file a tax return to report earnings and potentially claim a refund if taxes were withheld.

For international visitors, tax rules are more complex. The IRS typically imposes a 30% withholding tax on gambling winnings for non-U.S. residents. However, tax treaties with countries like Canada, the United Kingdom, and Germany may allow residents to claim a full or partial refund by filing Form 1040-NR. Without a tax treaty, recovering withheld funds is difficult, as nonresidents generally cannot deduct gambling losses against their winnings.

Recordkeeping Necessities

Accurate records are essential for reporting gambling winnings and claiming deductions. Since gambling income is self-reported, thorough documentation ensures compliance and supports refund claims or loss deductions.

A gambling log should include the date and location of each session, the type of game played, amounts wagered, winnings, and losses. Supporting documents such as wagering tickets, receipts, and bank statements further substantiate reported figures. Many casinos offer win/loss statements to players using loyalty cards, but these only reflect tracked play and may not capture all transactions. Professional gamblers may need additional documentation, such as bank records and financial statements, to establish gambling as a primary source of income for tax purposes.