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- Winning Blackjack Tips
After the thrill of collecting gambling winnings, comes questions about taxes.
Yes, gambling income, which includes winnings from slots, table games, horse racing, sports betting, lottery games, jackpots, and the like, is considered taxable income. As such, you are required to report them on your tax return. The car, boat, or Harley Davidson and other noncash prizes also need to be reported.
There are plenty of questions surrounding Pennsylvania taxes and gambling winnings. Now there are even more with the advent of sports betting, betting apps, and online casinos in Pennsylvania.
Here are some answers.
Blackjack Forum. An independent and uncensored Blackjack Forum community to discuss Card Counting techniques, Strategy, Tournaments, Advantage Play, and more. In the U.S., you are obliged to report all income for all sources, including gambling winnings, on your annual 1040 form. That is the law. That said, you probably can get away with not reporting low-roller, undocumented cash wins from a vacation trip. However, certain situations trigger a W-2G form from the casino.
How much are my gambling winnings taxed?
Casinos withhold 25% of winnings for those who provide a Social Security number. If you do not provide your Social Security number, the payer may withhold 28%.
Currently, Pennsylvania's personal income tax is a flat tax rate of 3.07% which applies to all taxable income, including gambling and lottery winnings. PA has the lowest rate of all states with a flat tax.
The new regular withholding rate
Effective for taxable years beginning after December 31, 2017, the withholding rate under Section 3402(q) applicable to winnings of $5,000 or more from sweepstakes, wagering pools, certain parimutuel pools, jai alai, and lotteries (formerly 25%) is 24%.
Federal Form W-2G, Certain Gambling Winnings
The organization that pays the winnings, in most cases, the casino, is responsible for sending the recipient of the winnings Form W-2G, Certain Gambling Winnings.
Form W-2G reports the amount of winnings to you as well as to the IRS.
The payer is required to send Form W2G only if the winner reaches the following thresholds:
- 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 by the wager, are:
- $600 or more, and
- At least 300 times the amount of the wager
- The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding)
How to report PA gambling winnings on taxes
According to the IRS, you must report the full amount of your gambling winnings each year on your federal taxes. First, you report gambling winnings as
You may receive a Form W-2G showing the amount of your gambling winnings and any tax withheld. Include the amount from box 1 as 'Other Income' on Form 1040, Schedule 1 (PDF).
That number then goes on your U.S. Individual Income Tax ReturnForm 1040 (PDF), line 7a (designated 'Other Income'). You should attach the Schedule 1 form to your Form 1040.
Include the amount shown in box 2 on the W-2G on line 17 (designated as federal income tax withheld) of your Income Tax Return (Form 1040).
Pennsylvania state taxes for gambling
In addition to federal taxes payable to the IRS, Pennsylvania levies a 3.07% tax on gambling income.
You should report your Pennsylvania taxable winnings on PA-40 Schedule T (PDF). Include the total winnings from line 6 of Schedule T on your Pennsylvania Income Tax ReturnPA-40 (PDF), line 8 ('Gambling and Lottery Winnings').
If your gambling winnings come during a trip to another state or country, you are still required to report.
Michelle Malloy, Esq. at AUA Capital Management, LLC in Conshohocken, Pennsylvania, commented:
'Pennsylvania takes the position that they are entitled to tax a portion of your worldwide income based on certain income items (wages, interests, dividends, capital gains, gambling winnings, lottery winnings, etc).'
What if I don't receive a Form W2-G?
If you did not receive Form W-2G, your winnings are still considered taxable income and should be reported. A payer is required to issue you a Form W-2G if you receive certain gambling winnings or have any gambling winnings subject to federal income tax withholding.
According to Malloy:
'You are required to report all gambling winnings for federal and Pennsylvania taxes. If you hit a certain threshold they (the casino) will withhold money. In the instance where a casino doesn't do their job and and fails to send you a W2-G you are still required to report your winnings, or you run the risk of underreporting your taxable income for the year.'
Do I have to pay taxes if a group of people win the lottery?
What happens when a group of coworkers chip in on a lottery ticket that wins? What about you and a friend who put money on a long-shot team to win the championship?
Meet Form 5754 (PDF). Payers use this form to prepare Form W-2G when the person receiving gambling winnings subject to reporting or withholding is not the actual winner or is a member of a group of two or more people sharing the winnings.
Don't send Form 5754 to the IRS. Keep a copy for your records and return the form to the payer (usually the casino) for preparation of Form W-2G for each person listed as winners.
Are there any deductions available for taxes related to gambling?
Gambling losses can be deducted. However, they must be itemized on line 28 of Schedule A, Form 1040.
Also, you cannot deduct more than your winnings.
Expenses related to any gambling or lottery activities, (like your dinner at the steakhouse, celebratory drinks from the bar, or cost of hotel room) cannot be deducted.
If you are going to deduct gambling losses, keep these records:
- The date and type of each wager
- The name and location of the bet
- The amount won or lost
- Wagering tickets
- Canceled checks
- Credit card records
When using a players club/members card, casinos can track players' spend. Therefore, you can request a win/loss report that will give you a fairly good sense of your activity in a casino. Online casino players can request the same report and most sites should be able to provide it without issue.
'A lot of people may under-report,' explained Malloy. 'They might win $10,000 but have $3,000 of expenses so they think they are just going to report $7,000. That can be an issue, as Pennsylvania does not allow a deduction for expenses. If you win a lot of money in June, for example, you might want to make an estimated tax payment [due Sept. 15 and Jan. 15] so you don't have an underpayment penalty the following April.'
How to claim gambling winnings and/or losses
Pennsylvania provides a helpful resource to determine how to claim gambling winnings and/or losses.
There is a prompt where you can start a ten-minute interview.
Be sure to have the following information ready:
- Your and your spouse's filing status
- Amount of your gambling winnings and losses
- Any information provided to you on a Form W-2G
Taxes on multistate lotteries
The Pennsylvania Department of Revenue considers multi-state lottery prizes, like those from Powerball and Mega Millions, awarded on tickets purchased through a licensed Pennsylvania state lottery ticket vendor, a prize by the Pennsylvania Lottery.
'Such prizes are considered Pennsylvania source income and both residents and nonresidents are subject to tax on such income if the prize is a cash prize. Multistate lottery prizes awarded on tickets purchased through a vendor in another state lottery are considered prizes awarded by that state lottery. Such prizes are not considered Pennsylvania source income and only residents are taxed on such income regardless of whether the prize is a cash or noncash prize.'
Due to a 2016 law change, any cash prize won from a Powerball of Mega Millions ticket in any state is taxable for state purposes, in addition to federal taxes.
What happens if you win a few thousand dollars on a winning PA lottery ticket?
Lottery winnings are included in taxable income. Pennsylvania Lottery winners of an individual prize valued at more than $600 will receive a Form W2-G by mail.
If your spouse also wins, they must report their winnings separately.
'For a significant windfall, like over $5 million, it definitely makes sense to talk to an attorney or accountant to determine if they should take a lump sum payout or annuity. They may also need to think about estate tax planning, financial planning and/or asset protection planning for their windfall,' said Malloy.
Sports betting winnings and taxes
Sports betting winnings are taxable income.
The IRS states:
'Gambling winnings are fully taxable and you must report the income on your tax return. 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.'
The payer is required to send Form W2G only if the winner reaches the following thresholds:
- 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 by the wager, are:
- $600 or more, and
- At least 300 times the amount of the wager
- The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding)
How to report PA gambling winnings on taxes
According to the IRS, you must report the full amount of your gambling winnings each year on your federal taxes. First, you report gambling winnings as
You may receive a Form W-2G showing the amount of your gambling winnings and any tax withheld. Include the amount from box 1 as 'Other Income' on Form 1040, Schedule 1 (PDF).
That number then goes on your U.S. Individual Income Tax ReturnForm 1040 (PDF), line 7a (designated 'Other Income'). You should attach the Schedule 1 form to your Form 1040.
Include the amount shown in box 2 on the W-2G on line 17 (designated as federal income tax withheld) of your Income Tax Return (Form 1040).
Pennsylvania state taxes for gambling
In addition to federal taxes payable to the IRS, Pennsylvania levies a 3.07% tax on gambling income.
You should report your Pennsylvania taxable winnings on PA-40 Schedule T (PDF). Include the total winnings from line 6 of Schedule T on your Pennsylvania Income Tax ReturnPA-40 (PDF), line 8 ('Gambling and Lottery Winnings').
If your gambling winnings come during a trip to another state or country, you are still required to report.
Michelle Malloy, Esq. at AUA Capital Management, LLC in Conshohocken, Pennsylvania, commented:
'Pennsylvania takes the position that they are entitled to tax a portion of your worldwide income based on certain income items (wages, interests, dividends, capital gains, gambling winnings, lottery winnings, etc).'
What if I don't receive a Form W2-G?
If you did not receive Form W-2G, your winnings are still considered taxable income and should be reported. A payer is required to issue you a Form W-2G if you receive certain gambling winnings or have any gambling winnings subject to federal income tax withholding.
According to Malloy:
'You are required to report all gambling winnings for federal and Pennsylvania taxes. If you hit a certain threshold they (the casino) will withhold money. In the instance where a casino doesn't do their job and and fails to send you a W2-G you are still required to report your winnings, or you run the risk of underreporting your taxable income for the year.'
Do I have to pay taxes if a group of people win the lottery?
What happens when a group of coworkers chip in on a lottery ticket that wins? What about you and a friend who put money on a long-shot team to win the championship?
Meet Form 5754 (PDF). Payers use this form to prepare Form W-2G when the person receiving gambling winnings subject to reporting or withholding is not the actual winner or is a member of a group of two or more people sharing the winnings.
Don't send Form 5754 to the IRS. Keep a copy for your records and return the form to the payer (usually the casino) for preparation of Form W-2G for each person listed as winners.
Are there any deductions available for taxes related to gambling?
Gambling losses can be deducted. However, they must be itemized on line 28 of Schedule A, Form 1040.
Also, you cannot deduct more than your winnings.
Expenses related to any gambling or lottery activities, (like your dinner at the steakhouse, celebratory drinks from the bar, or cost of hotel room) cannot be deducted.
If you are going to deduct gambling losses, keep these records:
- The date and type of each wager
- The name and location of the bet
- The amount won or lost
- Wagering tickets
- Canceled checks
- Credit card records
When using a players club/members card, casinos can track players' spend. Therefore, you can request a win/loss report that will give you a fairly good sense of your activity in a casino. Online casino players can request the same report and most sites should be able to provide it without issue.
'A lot of people may under-report,' explained Malloy. 'They might win $10,000 but have $3,000 of expenses so they think they are just going to report $7,000. That can be an issue, as Pennsylvania does not allow a deduction for expenses. If you win a lot of money in June, for example, you might want to make an estimated tax payment [due Sept. 15 and Jan. 15] so you don't have an underpayment penalty the following April.'
How to claim gambling winnings and/or losses
Pennsylvania provides a helpful resource to determine how to claim gambling winnings and/or losses.
There is a prompt where you can start a ten-minute interview.
Be sure to have the following information ready:
- Your and your spouse's filing status
- Amount of your gambling winnings and losses
- Any information provided to you on a Form W-2G
Taxes on multistate lotteries
The Pennsylvania Department of Revenue considers multi-state lottery prizes, like those from Powerball and Mega Millions, awarded on tickets purchased through a licensed Pennsylvania state lottery ticket vendor, a prize by the Pennsylvania Lottery.
'Such prizes are considered Pennsylvania source income and both residents and nonresidents are subject to tax on such income if the prize is a cash prize. Multistate lottery prizes awarded on tickets purchased through a vendor in another state lottery are considered prizes awarded by that state lottery. Such prizes are not considered Pennsylvania source income and only residents are taxed on such income regardless of whether the prize is a cash or noncash prize.'
Due to a 2016 law change, any cash prize won from a Powerball of Mega Millions ticket in any state is taxable for state purposes, in addition to federal taxes.
What happens if you win a few thousand dollars on a winning PA lottery ticket?
Lottery winnings are included in taxable income. Pennsylvania Lottery winners of an individual prize valued at more than $600 will receive a Form W2-G by mail.
If your spouse also wins, they must report their winnings separately.
'For a significant windfall, like over $5 million, it definitely makes sense to talk to an attorney or accountant to determine if they should take a lump sum payout or annuity. They may also need to think about estate tax planning, financial planning and/or asset protection planning for their windfall,' said Malloy.
Sports betting winnings and taxes
Sports betting winnings are taxable income.
The IRS states:
'Gambling winnings are fully taxable and you must report the income on your tax return. 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.'
Even though sports betting isn't specifically listed, it falls under the umbrella of 'gambling winnings.'
Reporting Roulette Winnings
Wherever your sports betting win occurred – at the OTB, the casino, on a sports betting app – they payer should send Form W-2G.
Sports betting losses might also be used as deductions if you itemize your deductions and keep a detailed record of wins and losses.
Based on your tax bracket, sports bettors in Pennsylvania could owe up to 35 % of winnings to the federal government in addition to the 3.07 % Pennsylvania taxes net gambling winnings.
Online gambling and taxes
Sports betting apps and online casinos provide unmatched convenience. You may also enjoy the anonymity of playing behind a screen name instead of in person. However, it still comes with the same tax responsibilities. Online gambling winnings are considered taxable income at the same rate as other gambling winnings.
For online gambling winnings, the payer is required to send Form W2G only if the winner reaches the following thresholds:
- 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 by the wager, are:
- $600 or more, and
- At least 300 times the amount of the wager
- The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding)
In terms of deductions for taxes, players can request a report from online casinos detailing wins and losses.
The famous card game known as blackjack has rocked the gambling world for centuries. Surely, people have lost a lot over it, but there were a lot of lucky winners over the years as well. The reality of it all is that probably some of the biggest wins haven't been made public and will forever remain a secret between the player and the dealer, especially big wins from previous decades when there was no internet, no smartphones and no ever present media.
But just for fun, what are the biggest wins known in blackjack and who were the lucky players? Here are the top five.
No.5: Shoeless Joe
We have a mysterious case of a winner whose identity was never revealed. As is turns out, it was an elderly man known as the Blackjack bum or Shoeless Joe (not related to Chicago White Sox player). He was believed to be kicked out of the house by his wife and was evidently not taking care of his personal hygiene for a while.
He came into the Treasure Island casino in 1995, without any shoes on his feet, and sat at a blackjack table after cashing in his $400 social security check. The man was ignorant to basic blackjack strategy, splitting 10s and doubling down on hard 12s and hard 13s, but that week he managed to win around $1.5 million. However, it must have triggered his unpleasant side, as he became aggressively annoying, which gave casino management reason to rejoice when he finally lost and was thrown out of the casino.
No.4: Ken Uston
Blackjack Hall of Fame member Ken Uston was a complete opposite from our previous winner. Relyig on Edward Thorp's Beat the Dealer book, he based his play on strategy, rather than pure luck, mastered the mathematical elements of the game and applied them on team play.
He is referred as the creator of blackjack card counting teams, early predecessor of the notorious MIT team.
Between 1975 and 1981, Ken Uston and his team of card counters accumulated winnings resulting in a sum worth more than $4.5 million, running the impressive streak across multiple tables and numerous casino venues across the United States. Check our Blackjack History Infographics for more info.
Blackjack Sites with Highest Payout Games
No.3: Kerry Packer
Percentage Of Winning Blackjack
Our next contestant is the famous Aussie millionaire Kerry Packer. He was a media magnate, with a reputation of a passionate gambler – and was always considered one of the highest rollers in casinos worldwide. In 1991 he was sitting at a public blackjack table of the Las Vegas Hilton casino. It didn't take him much to win $7 million for that one night. Apparently, the Hilton had a special private room made for him after that. When he came back the next year, he reportedly gave back $10 million to the casino, but he probably didn't regret the loss all that much.
No.2: Don Johnson
One of the wins that set on fire the gambling world was certainly Don Johnson's accomplishment in 2011. No, we are not talking about the famous ‘Nash Bridges' Don Johnson, but it was also a pretty resourceful man, a CEO of Heritage Development LLC company. He had an unbelievable winning streak from December 2010 to April 2011, earning a total of $15.1 million playing in several major Atlantic City casinos.
The successful blackjack player first won $4.23 million at Caesars Atlantic City, then $998,000 at Borgata Hotel Casino & Spa the same month. After a while, his luck struck again, big time. He won $1.8 million at Borgata again, and in two nights another $2.25 million. And lastly, he won $5.8 million at Tropicana Casino.
How To Play Winning Blackjack
As he claims, he didn't count cards apply any other technique. He simply took advantage of every favorable house rule there is, and won more as he played more. According to some interviews, he managed to negotiate a certain discount on his loses in order to keep playing, and it certainly paid off.
Winning Blackjack Tips
No.1: Kerry Packer
It's not a mistake. We simply have to mention Kerry Packer once again. Not just because we want to, but because the man has had an extraordinary gambling career.
After becoming a regular at Las Vegas whenever he had time off or was on holiday, he came back for another round in 1995. Packer was reported to have played up to 8 hands simultaneously at multiple blackjack tables at Las Vegas MGM Grand this time. He placed bets of $250,000 per hand, and 20 times in a row there were only winning hands for him.
Within 40 minutes he finished his blackjack session cashing out $20 million. Allegedly, he renounced $1 million in favor of the dealers, leaving it behind as a tip!
The world of blackjack is truly inspirational, wouldn't you say?
