You know the saying about taxes being one of the few sure things in life, and you should know that maxim applies to taxes on sweeps casino winnings.
While playing and winning at sweepstakes casinos can be a whole lot of fun, the IRS considers the endeavor to be work — or, at least, an activity generating taxable income. Here’s how to make sure you’re doing your due diligence to pay taxes on sweepstakes winnings.
Are sweeps casino winnings taxable?
The IRS considers any sweepstakes casino winnings to be taxable income. Simply put, any sweepstakes winnings get added to wages earned through jobs, as well as dividends and capital gains, to make up your taxable income for the year. That means that you’ll want to keep orderly records of your winnings so you properly account for them come tax time. (If you’ve accumulated other gambling winnings during the year, such as a lucky trip to Las Vegas, you’ll need to count that as income also.)
Texas residents aren’t assessed state income tax, but those in states assessing income tax have to account for sweepstakes casino winnings (and other gambling winnings) as taxable income.
Federal taxation on sweepstakes casino winnings
Per the IRS, “Gambling income includes but isn’t limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes, such as cars and trips.”
Tax rates for those filing in 2024 range from 10% to 37%, depending on income and filing status.
| Rates | Single | Married filing jointly | Married filing separately | Head of Household |
|---|---|---|---|---|
| 10% | $0 – $11,600 | $0 – $23,200 | $0 – $11,600 | $0 – $16,550 |
| 12% | $11,600 – $47,150 | $23,200 – $94,300 | $11,600 – $47,150 | $16,550 – $63,100 |
| 22% | $47,150 – $100,525 | $94,300 – $201,050 | $47,150 – $100,525 | $63,100 – $100,500 |
| 24% | $100,525 – $191,950 | $201,050 – $383,900 | $100,525 – $191,950 | $100,500 – $191,950 |
| 32% | $191,950 – $243,725 | $383,900 – $487,450 | $191,950 – $243,725 | $191,950 – $243,700 |
| 35% | $243,725 – $609,350 | $487,450 – $731,200 | $231,251 – $365,600 | $243,700 – $609,350 |
| 37% | $609,350+ | $731,200+ | $365,600+ |
It’s possible, depending on how much you’ve won, that gambling winnings can put you in a higher tax bracket. If you have any questions related to your gambling taxes, PlayTexas recommends consulting with a tax professional before you file.
How to report your sweepstakes casino winnings on your federal income tax return
Preparation is key when you’re doing your taxes, and knowledge goes hand-in-hand with preparation. Here are some things to know to comply with tax laws when reporting your sweepstakes casino winnings.
- The IRS has a form to report your winnings to you and two different forms for reporting your winnings.
- Form W-2G, issued to you by a gambling facility for reporting specific gambling winnings;
- Schedule 1, a supplemental form for reporting what the IRS classifies as “Additional Income and Adjustments to Income” (use line 8b, in the “Other Income” section; and
- Form 1040, the primary tax filing form (with line 8 reserved for income calculated in the section of Schedule 1 that includes gambling winnings)
- Detailed instructions for Form W-2G are on the IRS site, but you should at least know the basic thresholds for using the form. The IRS instructs a gambling entity to use the form if:
-
- The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine;
- The winnings (reduced by the wager) are $1,500 or more from a keno game;
- The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament;
- The winnings (except winnings from bingo, slot machines, keno, and poker tournaments) reduced, at the option of the payer, by the wager are:
- $600 or more, and
- At least 300 times the amount of the wager; or
- The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding).
- While you can certainly amass a great number of modest payouts and not win enough of a payout to meet the W-2G requirements for any of those individual wins, know that any W2-G that you receive is also filed to the IRS — so you’ll most definitely want to report those winnings.
- If you win $600 or more from any one casino or other gambling entity, you technically meet the requirement for a 1099-MISC form sendout and should expect to receive one of those in the first or second month of the calendar year for the previous tax year.
Tips for reporting sweepstakes casino winnings
Make sure to keep a running record of all your wagering for the year. If you can keep receipts for all interactions, that’s best, but decide on a system for recording everything at the start of the year, and stick to it. Apps like Gambling Tracker, Pikkit, and CasinoIQ might help, or you might prefer old-fashioned pen to paper.
Check those winnings against the sweepstakes, social casinos, and other gambling entities you play at. Each entity will likely keep your transaction history on file.
Make sure you’re reading through the terms and conditions for each sweepstakes casino site you use. If the site notes that it reports winnings through the W-2G and 1099-MISC forms, that’s a good sign! That’s, specifically, the sign of a site that keeps good financial records and isn’t running afoul of the law.
If you have any questions on reporting winnings (and losses), a tax professional can help you out.
Final thoughts on paying taxes on sweepstakes casino winnings
Sweepstakes casinos are one of the latest innovations in online gaming, and they allow people to experience the joy of winning without setting foot in an online casino. Taxes are part of life, and they’re simply part of the deal when you collect winnings from a sweepstakes casino. But if you’re making sure that you’re keeping track of how much you’ve won, you’re taking the first crucial step to making sure you’re doing what you need to be doing as a responsible gamer.
Resources for filing taxes on sweepsstakes winnings
From the IRS:
Taxes on Sweepstakes Casino Winnings FAQs
Yes! All gambling winnings are taxable. Remember that even a few small payouts can affect your taxable income and tax bracket.
Yes. Report the fair market value of any non-cash prizes you win.
Winnings count toward your taxable income. If you’re single, you make $100,000 in taxable income before adding your gambling winnings, and those total just $550, that’s enough to move you from the 22% bracket to the 24% bracket.
You still have a responsibility to report what you’ve won, even if an individual casino doesn’t report it.