Casino Winnings Tax Limit

Yes, but there are certain thresholds that must be eclipsed to trigger a casino to report winnings. The threshold for which gambling winnings that must be reported to the IRS varies based on the. Gambling Winnings. A payer is required to issue you a Form W-2G, Certain Gambling Winnings PDF if you receive certain gambling winnings or have any gambling winnings subject to federal income tax withholding. You must report all gambling winnings as 'Other Income' on Form 1040 or Form 1040-SR PDF (use Schedule 1 (Form 1040 or 1040-SR) PDF. Oct 09, 2020 Gambling Winnings. A payer is required to issue you a Form W-2G, Certain Gambling Winnings PDF if you receive certain gambling winnings or have any gambling winnings subject to federal income tax withholding. You must report all gambling winnings as 'Other Income' on Form 1040 or Form 1040-SR PDF (use Schedule 1 (Form 1040 or 1040-SR) PDF. Casinos Report Certain Winnings to the IRS. Casinos, race tracks, state lotteries, bingo halls, and other gambling establishments located in the United States are required to tell the IRS if you win more than a specified dollar amount by filing a tax form called Form W2-G with the IRS. You’re given a copy of the form as well.

IP 2011(27)

Connecticut Income Tax Treatment of Gambling Winnings Other Than State Lottery Winnings

Purpose: This Informational Publication answers frequently-asked questions about the Connecticut income tax treatment of gambling winnings other than lottery winnings from state-conducted lotteries (state lottery winnings). Frequently-asked questions about state lottery winnings are answered in Informational Publication 2011(28), Connecticut Income Tax Treatment of State Lottery Winnings Received by Residents and Nonresidents of Connecticut.

Effective Date: Upon issuance.
Statutory Authority: Conn. Gen. Stat. §§12-700 to 12-746.

Definitions:

DRS means the Department of Revenue Services.

IRS means the Internal Revenue Service.

Casino Winnings Tax Limits

Gambling winnings means and includes proceeds from a wager placed in a sweepstakes; wagering pool or lottery (other than state-conducted lottery); payments made to winners of poker tournaments on or after March 4, 2008; or proceeds from a wagering transaction (including a wagering transaction in a casino, a parimutuel pool with respect to horse races, dog races, or jai alai). Gambling winnings also include door prizes, contest prizes, and prizes from raffles or similar drawings. Gambling winnings do not include state lottery winnings.

State-conducted lottery means a lottery conducted by an agency of a state acting under authority of state law, but only if the wager is placed with the state agency conducting the lottery or with its authorized employees or agents. State-conducted lottery includes the Connecticut Lottery conducted by the Connecticut Lottery Corporation, a public instrumentality of the State of Connecticut.

State lottery winnings means lottery winnings from a wager placed in a state-conducted lottery where the wager is placed with the state agency conducting the lottery or with its authorized employees or agents. State lottery winnings include Connecticut Lottery winnings.

1. Are gambling winnings subject to Connecticut income tax?

Whether gambling winnings are subject to Connecticut income tax depends on whether or not the winner is a Connecticut resident.

If the winner is a resident of Connecticut and meets the gross income test (below), all gambling winnings are subject to Connecticut income tax to the extent includable in the winner’s federal adjusted gross income.

If the winner is a part-year resident of Connecticut and meets the gross income test, gambling winnings are subject to Connecticut income tax to the extent includable in the winner’s federal adjusted gross income and to the extent the winnings were received during the Connecticut residency portion of the winner’s taxable year.

If the winner is a nonresident of Connecticut, gambling winnings, whether from gambling in Connecticut or from gambling outside Connecticut, are not subject to Connecticut income tax.

For information on whether an individual is a resident, nonresident, or part-year resident, see the instructions to the Connecticut income tax return for residents Form CT-1040, Connecticut Resident Income Tax Return, or the Connecticut income tax return for nonresidents or part-year FormCT-1040NR/PY, Connecticut Nonresident and Part-Year Resident Income Tax Return.

Gross income test:

A winner must file a Connecticut income tax return and report his or her gambling winnings if the winner’s gross income for the 2011 taxable year exceeds:

· $12,000 and the winner is filing separately;

· $13,000 and the winner is filing single;*

· $19,000 and the winner is filing head of household; or

· $24,000 and the winner is filing jointly or qualifying widow(er) with dependent child.

A winner’s gross income includes all income received in the form of money, goods, property, and services not exempt from federal income tax and any additions required to be reported on Form CT-1040, Schedule 1. Gross income includes but is not limited to compensation for services including wages, fees, commissions, taxable fringe benefits, and similar items; gross income from a business; capital gains; interest and dividends; gross rental income; gambling winnings; alimony; taxable pensions and annuities; prizes and awards; income from partnerships, S corporations, estates, and trusts; individual retirement account distributions; unemployment compensation; and federally taxable Social Security benefits.

If a winner’s gross income does not exceed the applicable gross income threshold and Connecticut income tax has been withheld from his or her gambling winnings, the Connecticut income tax will not be refunded to the winner unless he or she files a Connecticut income tax return.

2. Are gambling losses deductible?

Gambling losses are not deductible for Connecticut income tax purposes even though, in certain circumstances, they are deductible for federal income tax purposes.

3. May a resident or part-year resident claim a credit against his or her Connecticut income tax for income tax paid to another state on gambling winnings?

No. Neither a resident nor part-year resident is eligible to claim a credit against his or her Connecticut income tax for income tax paid to another state on gambling winnings.

4. Will Connecticut income tax be withheld from gambling winnings?

Connecticut income tax will be withheld from a payment of gambling winnings if all of the following conditions are met:

  • The payer maintains an office or transacts business in Connecticut;
  • The payment is subject to federal income tax withholding; and
  • The payment is made to a resident or to someone receiving the payment on behalf of a resident.

For example, a dog track located within Connecticut must withhold Connecticut income tax from a payment of winnings only if the payment is subject to federal income tax withholding and the payment is made to a resident or to someone receiving the payment on behalf of a resident. Also, if a payer of gambling winnings is a nonprofit organization maintaining an office or carrying on activities in Connecticut, the nonprofit organization must withhold Connecticut income tax from a payment of gambling winnings if it is required to withhold federal income tax from the payment and the payment is made to a resident or to someone receiving the payment on behalf of a resident.

Casino Winnings Tax Limit Earned

The fact that federal or Connecticut income tax may have been withheld from a winner’s winnings does not excuse the winner from filing a federal income tax return or a Connecticut income tax return.

Connecticut income tax will not be withheld from gambling winnings if the payer does not maintain an office or transact business in Connecticut, if the payment is not subject to federal income tax withholding, or if the payment is not made to a resident or someone receiving the payment on behalf of a resident.
Casino Winnings Tax Limit

5. Is a winner required to provide his or her name, address, and Social Security Number (SSN) to the payer?

Yes. A winner is required by federal law to provide proper identification to verify his or her name, address, and Social Security Number.

6. How is a winner’s residency status determined?

A payer of gambling winnings determines the residency status of a winner based upon the address furnished and the identification provided by the winner. The payer must additionally require two forms of identification from the winner including but not limited to a Social Security card or a driver’s license.

7. What if there is more than one winner?

Casino winnings tax limit rules
If more than one person is entitled to a share of the winnings subject to reporting or withholding, one federal Form 5754, Statement by Person(s) Receiving Gambling Winnings, must be completed identifying each person entitled to a share. Federal Form 5754 is also used when the person receiving gambling winnings subject to reporting or withholding is not the actual winner. This form will list the name, address, and taxpayer identification number of all persons receiving any payment of the winnings. The form must be signed, under penalty of perjury, by the person or persons receiving the winnings. The payer uses the information on federal Form 5754 to prepare federal Form W-2G for each of the winners. A copy of federal Form 5754 must be retained by the payer. A copy of federal Form 5754 need not be submitted to DRS, but must be made available upon request. If the person receiving the winnings is unable to properly identify any of the persons entitled to a share of the winnings or their state of residence, the amount of the winnings applicable to the other person is considered to have been won by a resident of Connecticut and Connecticut income tax must be deducted and withheld from the winnings.

8. Will payments of gambling winnings be reported to DRS?

If a payer of gambling winnings maintains an office or transacts business in Connecticut, the payer is required to report payments of gambling winnings to DRS if the payer is required to report the payment to the IRS and the payment is made to a resident or to someone receiving the payment on behalf of a resident.

Casino Winnings Tax Limit

The fact that a payer may not have been required to report a payment of gambling winnings to the IRS does not excuse the winner from reporting those winnings for federal and Connecticut income tax purposes.

While payers of gambling winnings not maintaining an office or transacting business in Connecticut are not required to report payments to DRS, the IRS provides information about gambling winnings of Connecticut residents to DRS.
Effect on Other Documents: Informational Publication 2009(36), Connecticut Income Tax Treatment of Gambling Winnings Other Than State Lottery Winnings, is modified and superseded and may not be relied upon on or after the date of issuance of this Informational Publication.
Effect of This Document: An Informational Publication issued by DRS addresses frequently-asked questions about a current position, policy, or practice, usually in a less technical question and answer format.

Casino Winnings Tax Limit 2019

For More Information: Call DRS during business hours, Monday through Friday:

  • 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only); or
TTY, TDD, and Text Telephone users only may transmit inquiries anytime by calling 860-297-4911.

IP 2011(27)
Income Tax
Gambling Winnings
Issued: 01/04/12

Gambling In America

If you've ever won a jackpot in Las Vegas, you probably know that your excitement diminishes at least a little when the casino throws a W-2G tax form in your face. In fact, if you don’t provide your social security number, the casino will automatically withhold up to 30% of your winnings. The same goes for lottery and horse racing wins above $1200. Yet when playing online, paying taxes isn’t always so black and white.

Americans who play at US-based online casinos will usually have to deal with withholding taxes just like in Las Vegas. Yet that only represents a small fraction of your entertainment options. When playing at licensed offshore online casinos or poker rooms, American players usually won’t hear the words taxes mentioned at all.

Sadly, it is never safe to assume that your winnings are ultimately tax-free. It is true that Americans who play at internet gambling sites outside of the USA won’t be subject to withholding taxes when withdrawing their winnings. Yet you may be required to report these gains when you file your taxes in April. The greatest determinant is the number, size, and frequency of your wins. The actual threshold varies from state to state and whether or not you are an amateur or professional. For more information on reportable gambling winnings visit the IRS guide: https://www.irs.gov/instructions/iw2g/ar02.html

Professional Gamblers

Whether or not you qualify as a professional gambler doesn’t solely depend on your performance at the tables. The main litmus test is the expectation and probability of profit in the eyes of the Internal Revenue Service. Your success and whether or not you have a regular job on top of gambling may also be factors.

With even amateur gamblers having to deal with taxes, professional gambling does have benefits. You can actually deduct your wins from your losses when your treat your gameplay as a business. No matter what your current status is and how often you play, it's best to keep tabs on your performance to develop strategies, stick to a budget, and simply know where you stand. You can find this tip sheet courtesy of the IRS: https://www.irs.gov/taxtopics/tc419.html

Whether or not the IRS can actually track your winnings is another matter entirely. Yet you should be aware of your obligations. With a huge budget deficit and ballooning debt, the federal government is looking to fill their financial holes any way they can. Between the NSA and modern forensic accounting practices, covering your digital tracks is more difficult than it used to be.

Tax Obligations Outside Of The USA

The United States is a bit of an outlier when it comes to taxing gambling winnings. In the United Kingdom, the government taxes the gross profits of casino operators rather than players. Canadians can play the lottery, live casinos, poker and online games without paying taxes unless they are a professional. Likewise, Australians and New Zealanders can also gamble tax-free. To put things in perspective, Americans do pay some of the lowest personal income taxes in the first world. Things tend to even out in the end.

Casino winnings tax limit amount

Like anything else, interpreting the rules is always a matter of debate. Here's an interesting tax perspective for Canadians: http://business.financialpost.com/personal-finance/tax-expert-a-gamble-over-poker-winnings

Casino

Things To Consider

Keep in mind that Americans have to deal with both Federal and State taxes on most forms of income. Always keep basic records no matter how often you play or win. This will make things easier during tax season.

Accountants Have The Answers

No matter where you live, it's always best to discuss your personal situation with a licensed tax professional in your area. You can usually get a short consultation for free with complete confidentiality. It's the best way to play by the rules while minimizing your tax burden.