In Ohio, you are welcome to play and win money at casinos, sportsbooks and via the lottery. But if you win enough you also have to pay taxes on those winnings. If you’re wondering about your tax liability for that big win at one of Ohio’s casinos, this page is for you.
Let’s go over all the particulars regarding paying taxes on your gambling winnings in Ohio.
Do I have to pay taxes on gambling winnings?
If it weren’t already obvious, yes. By law, you must pay taxes on every dollar that you win from a slot machine, a table game or any other legal game of chance. Even if you are a low-stakes player, we recommend that you pay taxes on your winnings dutifully, as no one should have to answer an audit for shooting craps or hitting a blackjack.
While it’s true that winning small amounts of money likely won’t earn the notice of the IRS or the Ohio Department of Taxation, be aware that both the federal government and Ohio consider all gambling winnings taxable income.
If you win $5,000 or more at an Ohio casino, it will withhold 24% of your winnings for federal tax purposes. The casino will also issue you a Form W-2G, the aptly named “Certain Gambling Winnings” form, as a record of both the win and the amount it withheld. In order to claim a win, you will have to show two forms of ID and submit your Social Security number or tax identification number to casino personnel.
For smaller victories, the casino won’t necessarily withhold any of your winnings for taxes, but it will still issue you a Form W-2G. Expect to receive such a form in any of the following instances:
- Total winnings exceeding $1,200 on a slot machine.
- Total winnings exceeding $1,200 for a bingo game.
- Keno profit (the total minus your bet) of more than $1,500.
- Profit from a poker tournament (with buy-in subtracted) of more than $5,000.
- Gambling winnings on any game except the ones mentioned above that exceed $600 and 300 times the wager amount.
Even if the casino doesn’t withhold any money from your winnings, you still must pay taxes on them. You should know that whenever you receive a Form W-2G, the IRS likewise receives notification. It wouldn’t be too smart, then, not to report those winnings. Of course, even if you don’t receive a form and the casino doesn’t report your winnings, you’re still technically obligated to pay income tax on them.
What to do for federal taxes
Note, however, that the IRS doesn’t actually care about your results from each individual day you play at the casino. Instead, it’s the aggregate total winnings for the year that the taxman wants to know about. As is the case for almost everything the IRS does, there are forms that you have to complete.
How to report
Your first move when you go to report your gambling winnings to the IRS is to fill out a Schedule 1. The Schedule 1 form is titled Additional Income and Adjustments to Income and is where you enter any income that you earn during the year from sources other than your primary place of employment. In other words, if you made money upon which you have not already paid taxes, you probably need to record it here.
For gambling winnings, the correct line to enter your total for the year is Line 8b — Gambling Income. Round your winnings to whole dollar amounts. After you enter your winnings and any other income, be sure to total everything up at the bottom of the form per the instructions. Then be prepared to attach the completed Schedule 1 to your main return.
On your primary 1040 Form, you will need to report the results from Schedule 1 on Line 8. As you may gather from the rest of the form, your gambling winnings thus become part of your taxable base income for the year.
It is possible to deduct your gambling losses as itemized deductions on your primary return, too. However, there is a bit more that you have to do throughout the year in order to make that happen. First, you must keep an accurate record of the dates, times and results of your sessions so that you can prove that you lost what you say you lost. Then, you must fill out the IRS Form Schedule A on Line 16 — Other Deductions. From your total on Schedule A, you can then fill out the appropriate section on your 1040.
Note that if you choose to go this route, you can’t take the standard deduction as you might otherwise do. In order to deduct gambling losses, you’ll have to itemize all your deductions.
There are a couple of other caveats when submitting your losses as deductions. First, you may only deduct an amount up to the value of the gambling income you report. In other words, the best you can hope to do with a loss deduction is make the impact of all your gambling activities on your taxes neutral or zero. Also, you can only deduct losses from gambling specifically and not related expenses such as the cost to travel to play poker in tournament and the like.
What if I don’t receive a Form W-2G?
Although Ohio casinos have requirements of when they must issue a Form W-2G, mistakes can still happen. Since you are ultimately responsible for your taxes, it’s not a good idea to wash your hands of the situation and hope for the best. It’s possible that the casino never filled out a W-2G, but it’s also possible that it simply never gave you a copy and reported the win to the government. Or you may have misplaced your copy.
Here are some steps you can take if you think you are missing a Form W-2G and you need to report some gambling income:
- Call the casino or visit it in person. It should be no problem for the casino to make you a copy of the form if it has one on file.
- If the casino can’t help, contact the IRS, which may be able to help.
- If neither of those steps work, report the income as best you can remember.
Although it’s not really a step for dealing with a lost Form W-2G, we highly recommend that you keep accurate records of your gambling regardless of whether you’re hitting various tax reporting thresholds. A casino journal might mean the difference between IRS penalties and simple grumbling about how much the government takes.
What to do for Ohio taxes
The state of Ohio also demands a piece of any action you earn at its casino locations. If you are an Ohio resident, your next step after filing a federal tax return will be to file a return with the state.
How to report
By and large, you merely have to fill out your Ohio IT 1040 Line 1 with your federal taxable income amount. Since you will have already included your gambling winnings at that point, you don’t have to do anything else.
However, if you received a Form W-2G from an Ohio casino location, you will need to do a bit of extra work. By state law, all Ohio casinos must automatically withhold 4% of any winnings that trigger the need to fill out one of these forms. If you were subject to this withholding, you’ll want to note it on both the Ohio Schedule of Withholding and on Line 14 of your primary Ohio return.
You definitely want to report it if a casino withheld any of your winnings for Ohio taxes, in part to ensure you don’t pay taxes on those winnings again.
If I win the lottery, will I have to pay taxes on that?
Yes. Whether you win one of the multi-state drawings like Mega Millions or Powerball or one of the in-state drawings through the Ohio Lottery like Classic Lotto + Kicker or Rolling 5 Cash, you need to be prepared to pay taxes on the winnings. Given the increase in jackpots recently, this is important to remember. On a side note, third-party vendors like Jackpoket allow you to purchase your Mega Millions and Powerball tickets online. If you’re lucky and win, fill out your Schedule 1, your 1040, your Ohio IT 1040 and your Ohio Schedule of Withholding as you would for any other type of gambling.
What if I win the lottery as part of a group?
Group lottery wins are quite common. Family members, friends, office workers and other groups may pool their money to purchase more tickets than they would be able to buy individually. Although the statistics aren’t much better either way, groups of people do manage to hit it big once in a while. However, you may wonder what to do about the tax liability for the split win.
IRS Form 5754 — Statement by Person(s) Receiving Gambling Winnings — is the form for these situations. One person from the group will be the actual prize recipient, and the other members then fill in the sections below regarding their share of the prize. Once everyone has filled in their portion, the form goes back to the entity that awarded the prize (i.e., the Ohio Lottery). You then will need to pay taxes according to your share of the proceeds.
What if I win a car or another prize?
Prize giveaways are a staple of companies, casinos and game shows. Winning a new car or a fabulous trip can seem great at the time. However, there is a downside that you need to consider before you claim any non-cash prize: You will be on the hook for a significant tax levy if you become the registered owner of the object.
For tax purposes, the government views any prizes the same as if you won an amount of cash equal to the fair market value of the prize. That means winning a $50,000 car bears the same tax responsibility as winning $50,000 in cash. The only difference, of course, is that there’s no cash that comes as part of the prize.
Therein lies a potential problem. Putting the fair market value of the prize on your tax statement might result in both a significant increase to your taxable income and you advancing into a higher tax bracket. You might find yourself obligated to pay many extra dollars out of pocket, particularly if the prize is well outside your typical price range. In other words, if you win a non-cash prize worth $750,000 and your salary is $75,000 per year, you may have a problem.
You might, for instance, be better served to ask if you can take a cash payout of equivalent or lesser value instead. If not, consult with a tax professional or the relevant portions of the IRS and Ohio Department of Taxation websites to anticipate what the tax hit will be. There’s no shame in walking away from a prize if it’s going to end up sinking your finances.
Where to go for more information about gambling and taxes
The IRS and the Ohio Department of Taxation have resources for taxpayers on a number of topics, including gambling winnings. When you access these resources, have all the information you can ready in order to streamline the process. That includes your Form W-2Gs, your personal information and proof of any gambling losses you might want to deduct.
For help with your Ohio state return, visit the Self Help eLibrary. And you can find an IRS Taxpayer Assistance Center here.
Do I have to pay taxes on my sports betting winnings?
Yes. Income earned from sports betting counts just like winnings from every other form of gambling. The same steps as above apply for sports betting.
Ohio responsible gambling resources
Support for responsible gambling in Ohio is extensive:
- Ohio Lottery Commission: Hosts the ‘Play Responsibly’ initiative, offering access to treatment programs, facts, and warning signs resources, alongside the Ohio Voluntary Exclusion Program.
- Ohio for Responsible Gambling: A collaboration of state agencies offering tips, warning sign information, and treatment options for those affected by gambling.
- Ohio Casino Control Commission: The regulatory authority provides a variety of responsible gambling resources, mental health services, and information on treatment facilities.
- Problem Gambling Network of Ohio: A nonprofit organization advocating for responsible gambling, providing treatment services, and hosting webinars and professional seminars.