If you win big at a casino or lotto do you have to pay taxes? Here’s what to know in Texas
A North Texas city is the site of where Tuesday’s winning Mega Millions Megaplier Prize lottery ticket was sold.
The ticket was sold at a 7-Eleven in Anna, located at 1510 West White St., which had $4 million in prize money.
Texas is one of the strictest states when it comes to gambling, however there are exceptions when it comes to bingo and the lottery.
Texas also does not have a state income tax, but what does that mean for residents who collect lottery winnings?
Are lottery and gambling winnings taxable in Texas?
Yes, both cash and non-cash winnings are taxable by the U.S. Internal Revenue Service.
According to H&R Block, cash winnings include:
- Lottery payouts
- Sweepstakes
- Bingo
- Raffles
- Poker and other games
- Keno
- Slot machines
- Casino winnings
Non-cash winnings include:
- Prizes like a vacation or car
In Texas, how taxable are lottery and out-of-state casino winnings?
All gambling winners are required to fill out a W-2G Form to report winnings to the IRS.
If your winnings are reported on a Form W-2G, federal taxes are withheld at a flat rate of 24%.
Income tax is withheld at a flat 24% rate from certain kinds of gambling winnings are:
- More than $5,000 from sweepstakes, wagering pools, lotteries
- At least 300 times the amount of the bet
Even if you won money gambling in another state, winners have to fill out a W-2G tax return in the state in which they are a non-resident and where the gambling took place.
Texans can calculate how much of their gambling winnings will be taxed using the Gambling Tax Calculator on the Bet Texas website.
