1. Does Michigan Tax Casino Winnings Winning
2. Does Michigan Tax Gambling Winnings
3. Does Michigan Tax Casino Winnings Payouts
4. Michigan State Tax On Casino Winnings

Most states require you to pay taxes on gambling winnings. Of course, some states are friendlier than others when it comes to taxing your wins.

1. The IRS considers most types of income taxable, unless the tax code specifically says it’s not. Because lottery winnings are considered gambling winnings, which are definitely considered taxable income, the IRS will want its cut. For lottery winnings, that means one of two things.
2. Gamblers know that all winnings are taxable. However, most people do not report their winnings unless he or she wins more than $1,200. $1,200 is the threshold of when the casino must report your winnings to the IRS on Form W-2G, Certain Gambling Winnings.
3. I’ll cut right to the chase: yes, you do need to pay federal taxes on gambling winnings in the United States. This is especially true when you net a big win and receive a W-2G form. According to the IRS, a gambling establishment should issue a W-2G when you win an amount that’s subject to federal income tax withholding (24% of win).

Certain places don’t charge any taxes when you win in gambling. You definitely want to consider betting in these states when you have the opportunity.

Unfortunately, it’s not. All winnings that you realize in a casino are taxable as income, both on the state and federal levels. So, you should be reporting those wins on your annual tax returns.

But what are the states that don’t tax gambling winnings? Of the states that do tax, which ones don’t charge you much?

This page discusses where you can gamble tax-free (minus federal taxes). It also covers what else you should know regarding taxes on real money gambling.

States That Don’t Tax Your Gambling Winnings

If you look at the gambling laws by state, nine states don’t collect taxes from your betting wins. That said, you’ll want to keep the following places in mind when planning your next gambling trip.

Alaska

The Last Frontier doesn’t offer many gambling opportunities on its frontier. Alaska only provides legal casino cruise ships, bingo, and pull tabs. At least you don’t need to pay state taxes when winning through any of these activities, though.

Delaware

With fewer than 974,000 residents, The First State isn’t overly large. Nevertheless, it does offer a thriving gaming industry that includes three racinos.

Florida

The Sunshine State boasts tribal casinos, poker rooms, and racetracks. Floridians also enjoy a 0% tax when winning at these gambling establishments.

Nevada

With over 440 casinos, Nevada’s gaming industry needs no introduction.

The Silver State won’t level state taxes on any of the big jackpots you win in Las Vegas, Reno, Laughlin, or elsewhere.

New Hampshire

The Granite State offers a few charity casinos and sportsbooks. You won’t need to pay taxes to New Hampshire when beating the bookies or casinos.

South Dakota

South Dakota may not have the largest population (885k). But it still offers 45 casinos and a bustling gaming destination in Deadwood.

Texas

The Lone Star State boasts one of the largest populations with 29 million residents. However, it doesn’t offer an abundance of gambling options compared to its big population. Texas features a few casinos (Class II only), horse tracks, and charity gaming venues.

Washington

The Evergreen State features a harsh stance on online gambling that includes felony charges. Nevertheless, it does offer some betting opportunities, including tribal casinos, poker rooms, and racetracks.

Wyoming

Wyoming is the smallest state in terms of population (579k). It still provides some gaming venues, though, including charity casinos, horse tracks, and poker rooms.

States With Low Tax Rates on Gambling Wins

Most states do tax you to some degree regarding winnings, and some states have a high gambling tax. However, the following ones don’t take much from you.

Arizona

The Grand Canyon State provides tribal casinos, horse tracks, and charity gaming. Arizona features a relatively low 4.54% tax rate on gambling wins.

Indiana

The Hoosier State features several casinos, multiple sportsbooks, and regulated online betting. Indiana taxes winnings at a 3.23% rate.

Michigan

Michigan offers 26 casinos, including three commercial venues in Detroit and 23 tribal establishments throughout the state.

It also features sports wagering and legal online gambling sites. The Wolverine State only charges a 4.25% tax rate on winnings.

North Dakota

Out of the states that tax winnings, North Dakota does it to the smallest degree at 2.90%. The Roughrider State provides tribal casinos, charity casinos, and lotteries.

Pennsylvania

Pennsylvania has become a mini-Las Vegas with 12 casinos along with poker rooms and sportsbooks. It only charges a 3.07% tax rate on gambling wins.

What If You Win in a State That Taxes Casino Winnings?

Only nine states let you off the hook regarding income tax on winnings. Odds are, you live in a state that taxes gambling profits.

That being said, take surrounding states and their taxes into consideration. Provided you live in/near a state with no, or low, gambling taxes, then you’re in good shape.

Federal Taxes Always Apply

Earlier, I covered nine states that don’t tax your wins in casinos, sportsbooks, poker rooms, etc. Even if you hail from one of these places, though, you still need to cover federal taxes.

Uncle Sam taxes your gambling winnings at 24%. This percentage is almost double the top rate in California (13.3%), which features the highest top-end gambling tax out of any state.

The federal government doesn’t expect you to only report jackpots or highly profitable years. It wants you to report every penny earned through gambling.

Of course, the IRS almost assuredly won’t hound you over a $10 winning Super Bowl bet against your friend. They will, however, care when you’re hitting jackpots and making serious profits.

A State Can Withhold Federal Taxes From Your Casino Wins

States are supposed to withhold federal taxes from large gambling payouts. Their casinos and sportsbooks will also issue a W-2G form if the win is big enough.

You need to fill this form out and give it to the gambling establishment. They’ll turn around and send it to the IRS before releasing your winnings.

Here are the guidelines on when bookmakers/casinos/poker rooms hand you a W-2G:

• $5,000+ payout in a poker tournament.
• $1,500+ payout in keno.
• $1,200+ payout through a slot or video poker machine.
• $600+ payout for a winning horse or sports bet (if win is 300x your stake).

Gambling Losses Are Deductible

As covered before, the IRS and state governments want you to report every dollar earned through gambling. However, you can deduct losses from winnings.

Everything that you wager and lose en route to winning counts as itemized deductions. These deductions reduce the amount of taxable income you’ll owe.

Here’s an example:

• You win $2,500 through a slot machine.
• You must report $2,500 under “other income.”
• You spend $1,700 to win this amount throughout the year (itemized deductions).
• $2,500 – $1,700 = $800 in reportable income.

You should record all of your gambling sessions for tax purposes. If the IRS ever comes calling for an audit, you’ll want evidence of your wins and losses.

The more information you possess, the better chance you stand of passing an audit with flying colors.

Can You Get Away Without Paying Gambling Taxes?

For the sake of avoiding any legal headaches, you should report gambling income and pay taxes on it. Of course, you may still wonder if it’s possible to get away without covering gaming related taxes.

Three potential reasons why you might wonder this include:

1. You don’t want to mess with $50, or so, of gambling winnings.
2. You don’t have records of losses and think that it’s unfair to cover taxes on wins.
3. You win big and want to avoid paying taxes.

In the first two cases, you may feel justified in not covering taxes. Dealing with winnings can be a major headache in these situations.

In the third case, you likely know that failing to cover taxes on huge wins is wrong. But you may consider it anyways because you don’t feel like giving away a chunk of your payout.

Again, state governments and the IRS want you to report everything. They leave it up to you to follow the laws in your respective jurisdiction.

I suggest that you keep records and go the honest route with gambling taxes. This way, you don’t need to sweat if you’re ever audited.

One situation when you definitely want to report wins is if you receive a W-2G form. Casinos and sportsbooks send W-2G’s to the IRS.

Therefore, the taxman will have documentation that you’ve earned a big prize. You don’t want to give them a reason to audit by not covering taxes on a large payout.

Conclusion

Hopefully, you live in or near a state that doesn’t require you to claim gambling winnings on your taxes. In this case, you can win big and only worry about paying the IRS.

Chances are, though, you live somewhere that imposes income tax on winnings. If so, you should consider if there are any nearby options that either don’t tax gambling wins or at least feature low rates.

Maybe this issue isn’t of the utmost importance to you—especially when you’re only playing for small stakes. But if you play for mid or higher stakes, then you can save yourself some money by playing where there’s no/little taxes taken from wins.

Taxes are probably the last thing on your mind during an exciting gambling session. However, they inevitably come up following a big win or profitable year.

You may have two main questions at this point:

• Do I need to pay taxes on my wins?
• If so, how much do I have to pay?

The following guide discusses whether your gambling wins are taxable and other important topics regarding this subject.

The Short Answer Is Yes

I’ll cut right to the chase: yes, you do need to pay federal taxes on gambling winnings in the United States. This is especially true when you net a big win and receive a W-2G form.

According to the IRS, a gambling establishment should issue a W-2G when you win an amount that’s subject to federal income tax withholding (24% of win).

Slot machines present a famous example of when you’ll receive a W-2G form after winning so much. Casinos must issue a form when you win a prize worth $1,200 or more through slots or video poker.

As for the second point, a sportsbook or racetrack must withhold federal taxes when you win a bet worth 300x your initial stake. If you wager $5 and win $3,000, for example, then the bookmaker will issue a W-2G form and withhold $720 (24%).

Here’s a broader look at the W-2G and tax withholding threshold for different types of gambling:

• $600+ through sportsbooks and racetracks (provided it’s 300x your stake).
• $1,200+ through a slot machine, video poker machine, or bingo game.
• $1,500+ through keno.
• $5,000+ through a poker tournament.

All Winnings Are Subject to Taxation

Technically, you’re supposed to report any gambling winnings—big or small. Even if you win $20 in an office betting pool, the IRS wants to know about it.

If you want to stay above board, then you should report all wins on Form 1040 (under “other income”). As I’ll cover later, you can deduct losses from winnings as well.

Furthermore, any amount that’s withheld by a casino, poker room, sportsbook, or racetrack is deducted from what you owe. Gambling establishments keep 24% of a win when they do withhold money.

W-2G Forms Don’t Apply to Table Games

You’ll receive a W-2G when earning big wins through most types of gambling. However, casino table games are an exception to the norm.

Unlike a jackpot game (e.g. video poker) or a poker tournament, casinos have no idea how much money you start with in a table game. Therefore, they can’t really determine when you do and don’t experience big wins.

Examples of table games that are exempt from W-2G forms include:

• Baccarat
• Blackjack
• Caribbean stud
• Craps
• Roulette
• Three-card poker

The IRS still expects you to pay taxes on profits earned through table games. Again, though, the casino can’t issue a W-2G because they can’t tell how much money you’ve actually won.

Some States Tax Gambling Winnings

Most states tax your income, including gambling winnings. Depending upon where you live, you’ll probably need to pay taxes to both the IRS and your state.

Does Michigan Tax Casino Winnings Winning

Michigan features a 4.25% flat income tax. The Wolverine State expects you to pay this same 4.25% rate on gambling wins.

West Virginia, on the other hand, doesn’t tax your winnings. Casinos/sportsbooks in the Mountaineer State only withhold federal taxes (when necessary).

Assuming you travel to another state to gamble, you may have two states wanting taxes. Luckily, though, you won’t be subject to double taxation.

Instead, your home state will give you credit for whatever taxes are paid to the state where the winnings occurred.

Can You Deduct Losses?

You can deduct gambling losses from winnings. However, these deductions are itemized rather than standard deductions.

Here’s an example to explain:

• You win $5,000 through sports betting.
• You lose $4,500.
• You must report the full $5,000—not $500 (5,000 – 4,500)—under other income.
• Meanwhile, the $4,500 is reported through various itemized deductions.

In short, itemized deductions are expenses that reduce your taxable income. The standardized variety includes flat-dollar, common deductions.

You may be able to save more money through itemized deductions. However, standard deductions are easier to deal with and also have the potential to save you more money.

Regardless, you must use itemized deductions when dealing with losses. This means spending more time on your tax returns or working with an accountant.

Keep in mind that you won’t receive a tax refund for gambling losses. Instead, you can only deduct an amount equal to your winnings each year. If you win $3,500, for example, then you can’t deduct more than $3.5k and expect a return.

Keep Records on Wins & Losses

The IRS may take your word at face value when it comes to gambling. Of course, they also have the ability to audit you when they deem it necessary.

That said, you don’t want to guestimate on your wins and losses. Instead, you want proof through the form of records.

Journals offer a great way to record your gambling activities. You can log the following for each entry:

• Date of gambling session
• Location of the establishment
• Game played
• Starting bankroll
• Ending bankroll

Such entries don’t guarantee you’re being honest. However, they at least show the IRS that you’re making a legitimate attempt at recordkeeping.

You can take your recordkeeping efforts even further by holding onto any other relevant documents. Betting slips, winning tickets, canceled checks, bank statements, W-2G forms, and anything else of relevance are all worth saving.

What Happens If You Don’t Report Gambling Winnings?

The IRS fully expects you to report gambling winnings and especially annual profits. They don’t take kindly to you failing to report these wins.

Of course, you’re unlikely to draw an audit for winning a $25 sports bet. You stand a higher chance of being audited, though, if you win enough for a W-2G form.

Does Michigan Tax Gambling Winnings

In this case, the casino/sportsbook/racetrack also sends a copy of the from to the IRS. The latter features reliable software that can match up your reported income with documentation of nonreported income.

Assuming you fail to report gambling winnings, then the IRS may do little more than send a letter and issue a small fine. You should definitely pay up, or at least work out a payment plan, in this case.

You’ll face more serious consequences, though, if you fail to report a huge win and lie about the matter when/if caught. Refusal to pay and/or heavy efforts to cover up the deceit will lead to bigger fines and possibly jail time.

Gamblers Stand Increased Chances of an Audit

Nobody likes attracting an audit from the IRS. Unfortunately, the chances of being audited increase for gamblers.

This is especially true when you net a big win and receive a W-2G. Of course, you can reduce the odds of being audited by claiming anything on the form.

The IRS may also become suspicious if you claim big losses on your tax return. You’ll put the taxman on increased alert when winning a huge prize (e.g. $50,000) and claiming a matching amount of losses.

Also, you can’t write off hotel stays, meals, and entertainment as a casual gambler. You must be a professional to claim such itemized deductions.

How Do Professional Gamblers Report Winnings?

Pro gamblers claim winnings on Schedule C as a self-employed person rather than as other income on Form 1040.

Even as a professional, you can’t deduct more losses than winnings in a year. You’re stuck in a tough situation with treating gambling as a day job, yet not being able to file losses that exceed winnings.

As mentioned before, though, you’re able to deduct business expenses like hotel stays and meals. These expenses just need to be a legitimate part of your business.

Conclusion

In answer to the original question, yes, you’re supposed to claim real money gambling winnings on federal tax forms. Even if you end up losing money on the year, the IRS wants to see your wins and losses.

Of course, tax collectors don’t care a great deal when you win $200 on the year. They spend most of their time looking for bigger winners.

The times when you want to be especially diligent in this matter include:

Does Michigan Tax Casino Winnings Payouts

• When you book a large win and receive a W-2G form.
• If you win a significant amount of profits throughout the year.
• When you win 600x your bet with a sports or horse wager.

Again, the IRS and your state (if applicable) expect all gambling winnings to be reported. But you can use some commonsense in deciding when reporting wins are truly necessary.

Michigan State Tax On Casino Winnings