The IRS requires that you report gambling winnings from:
- Horse races
It doesn't matter whether your winnings are paid in cash, in property, or as an annuity. Winnings not paid in cash are taken into account at their fair market value.
Income tax is withheld at a flat 25% rate from certain kinds of gambling winnings.
Gambling winnings of more than $5,000 from the following sources are subject to income tax withholding:
- Any sweepstakes; wagering pool, including payments made to winners of poker tournaments; or lottery.
- Any other wager, if the proceeds are at least 300 times the amount of the bet.
Gambling winnings from bingo, keno, and slot machines generally aren’t subject to income tax withholding. However, you may need to provide the payer with a social security number to avoid withholding. If you receive gambling winnings not subject to withholding, you may need to pay estimated tax. If you don't pay enough tax, either through withholding or estimated tax, or a combination of both, you may have to pay a penalty. See IRS Publication 17 for more information.
If a payer withholds income tax from your gambling winnings, you should receive a Form W-2G, Certain Gambling Winnings, showing the amount you won and the amount withheld. You’ll want to report the tax withheld on line 64 of Form 1040.