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About IRS Form W-2G

The Internal Revenue Service Tax Form W-2G must be filed to report payment of certain types of gambling winnings and withholdings on those winnings. Forms of gambling covered by W-2G include bingo, keno and slot machines, horse racing, sweepstakes, wagering pools and lotteries. Copies of the form must be provided to the winner as well as the IRS.

Each type of gambling has specific rules for filing and withholding, and these rules lay out minimum requirements for reporting winnings. For instance, bingo game or slot machine winnings must be reported if over $1,200 (not reduced by the wager). Keno winnings of more than $1500 (reduced by the wager) must be reported and more than $5,000 of poker winnings (reduced by the buy-in) must be disclosed on the W-2G. Horse racing, dog racing, jai alai, and all other gambling winnings must be reported only if higher than $600 and at least 300 times the amount of the wager, or are subject to federal income tax withholding.

Withholdings are entered in box 2 of the W-2G form. Withholding is required at the rate of 25% for gambling winnings of more than $500 (wager reduced), in sweepstakes, wagering pools, lotteries, keno, or any other category of gambling as long as the winnings are more than 300 times the wager. Backup withholdings at a rate of 28% can be required if the winner does not provide a correct taxpayer identification number and the other conditions for withholding have been met.

Electronics, automobiles, or any other non-cash payment must be calculated at FMV (Fair Market Value), and tallied into the total winnings. After subtracting the wager, if the non-cash transfer is valued at over $5,000 it is subject to gambling tax withholding. This can either be paid by the winner to the payer in the amount of 25% or by the payer, in the amount of 33.33%.

For bingo, keno, and slot machines, the W-2G form has boxes to indicate the type of wager, date of the winning transaction, ticket number and card number. For poker tournaments, the name of the tournament and its sponsor and the date of the poker tournament must be listed. For horse and dog racing, the date of the winning event, the race involved, and the type of wager (whether big triple or trifecta for instance) should be given. In all cases the amount of federal and state income tax withheld, and the name, address and TIN of the winner must be entered.

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Erich J. Ruth

Erich J. Ruth provides technical support for National Software which is the parent company for 1099FIRE. 1099FIRE develops and markets a comprehensive range of products that enables any size of business or institution to effectively manage and comply with year-end filing requirements. 1099FIRE is an employee-owned company located in Phoenix, Arizona.

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