Form W-2G for Gambling Winnings and Withholding: Reporting and Deductions

Form W-2G is the IRS document a casino, sportsbook, racetrack, or lottery commission gives you when your winnings hit a reporting threshold, and knowing how to fill out Form W-2G for gambling winnings really means knowing what to do with the copy you receive: the payer completes the form, and you carry its numbers onto your federal return (and your Massachusetts return, if that applies). One quick boundary before going further: Massachusetts Form 2G is unrelated to gambling. It is the Grantor/Owner’s Share of a Grantor-Type Trust form, a fiduciary document that shares only a name with the federal W-2G.¹

When a W-2G Gets Issued

For 2026, the baseline reporting threshold is $2,000, and it will adjust for inflation in future years.² How that $2,000 applies depends on the game:

Bingo and slot machines: the full payout counts, with no reduction for your wager. A $2,000 jackpot on a $5 slot pull triggers a W-2G.
Keno: your winnings are reduced by the amount you wagered on that game before comparing to the threshold.
General gambling, including table games, sports bets, and sweepstakes: the payout must be at least $2,000 and at least 300 times the wager. A $10 bet paying $3,000 qualifies. A $100 bet paying $2,500 does not, because 300 times $100 is $30,000.
Poker tournaments: net winnings (prize minus buy-in) must reach $2,000 from a single tournament.³

Winnings below these thresholds are still taxable. You owe federal and state tax on every dollar you win, whether or not a form is issued.⁴

What the Form Reports

The payer completes and signs the W-2G. You’ll usually get Copy B at the cage or window when you’re paid; if not, the payer must mail it by January 31.² Check these boxes when yours arrives:

Box 1: total reportable winnings from the transaction.
Box 4: federal income tax withheld.
Box 13: a code for the type of wager. Horse or dog race is 1, sweepstakes or lottery is 2, bingo, keno, or slots is 3, poker tournament is 4, and sports bet is 5.
Box 14: state tax withheld.
Box 15: the state and payer’s state ID number.

Verify your name, address, and Social Security number before you leave the counter. Errors here cause matching problems later.

Withholding on the Payout

Two federal withholding rules can apply, and Massachusetts adds a third.

Regular federal withholding of 24% kicks in when net proceeds exceed $5,000 on sweepstakes, wagering pools, lotteries, and some parimutuel payouts. Poker tournaments are handled differently: if the payer files a W-2G and gives you a copy, regular withholding does not apply to the tournament winnings.³

Backup withholding of 24% applies to the entire payout, on any game and at any amount, when you fail to give the payer a valid taxpayer identification number.⁵

Massachusetts state withholding of 5% applies to gambling winnings of $600 or more that are also subject to federal withholding, on payouts from casinos, racetracks, and slot parlors licensed in the Commonwealth.⁶ It appears in Box 14.

Putting the Winnings on Your Federal Return

All gambling winnings go on Schedule 1 (Form 1040) as other income, whether or not a W-2G was issued.⁴ Add every W-2G Box 1 amount, add any smaller winnings that fell below reporting thresholds, and report the total on the one line. Federal tax already withheld (Box 4) gets credited against your tax on Form 1040, so you’re not paying twice on the same money.

Paper filers attach Copy B of each W-2G to the return. Tax software pulls the form data into the correct fields when you enter it.

Putting the Winnings on Your Massachusetts Return

Massachusetts residents use Form 1 and split gambling income by source:

Non-lottery gambling (casino, sportsbook, racetrack): net winnings on Schedule X, Line 3. Net winnings means total winnings minus the cost of the winning ticket or wager.⁷
Massachusetts state lottery: net winnings on Form 1, Line 8b (Form 1-NR/PY, Line 10b for nonresidents and part-year residents).⁸

Gambling income is Part B income taxed at 5%.⁹ If your total taxable income for 2026 exceeds $1,107,750, an additional 4% surtax applies to the amount above that threshold, and a large gambling win can push you past it.¹⁰

If you live outside Massachusetts but won money at a Massachusetts casino, racetrack, or sportsbook, that income is Massachusetts-source. Nonresidents file Form 1-NR/PY when total Massachusetts-source income exceeds $8,000, reporting the winnings on Schedule X, Line 3 by the same rules as residents.¹¹ Your home state typically gives a credit for the Massachusetts tax paid on that same income; check its instructions for the out-of-state credit.

Deducting Losses

On the federal return, gambling losses are deductible up to the amount of your winnings, but only if you itemize on Schedule A. Starting in 2026, the deduction is capped at 90% of your gambling winnings rather than the full amount, and the disallowed 10% does not carry forward. Professional gamblers reporting on Schedule C face the same 90% cap, applied to combined wagering losses and business expenses.

Massachusetts is narrower. You can deduct only the cost of a winning ticket or wager from the winnings that ticket produced. A $5 scratch ticket that wins $500 reduces the taxable amount by $5. Losing tickets are not deductible, and the itemized gambling loss deduction from federal Schedule A does not carry over.⁷

One exception: losses at a Massachusetts-licensed gaming establishment (a casino, slots parlor, racetrack, or simulcasting facility licensed under Chapter 23K) can offset winnings from any such licensed facility in the same calendar year, up to total winnings from those facilities. Losses at out-of-state casinos or unlicensed online platforms don’t qualify.⁷

Group Wins and Form 5754

When two or more people share a winning wager, the person who collects the payout completes Form 5754, Statement by Person(s) Receiving Gambling Winnings, listing each winner’s name, address, Social Security number, and share of the prize. The payer then issues a separate W-2G to each person.²

Reporting and withholding thresholds are measured against the full payout, not each share. If a group wins $5,002 on a $1 sweepstakes ticket, the $5,001 in net winnings crosses the $5,000 withholding line, and 24% is withheld from the total before payouts. Each person then receives a W-2G for their portion.² The payer keeps Form 5754; it doesn’t go to the IRS.

Records to Keep

To deduct any losses, the IRS expects an accurate, contemporaneous diary of winnings and losses, plus receipts, tickets, or statements backing up the amounts.⁴ There’s no required format. A useful log records the date and type of activity, the name and location of the establishment, amounts won and lost per session, and the names of anyone present for shared wagers or group play. Keep W-2G copies, wagering tickets, casino credit slips, and bank or card statements alongside the log. For the Massachusetts loss deduction, your records need to show clearly which losses happened at Chapter 23K-licensed facilities.

Penalties for Underreporting

Both the IRS and the Massachusetts Department of Revenue match the winnings you report against the W-2G data payers file. Mismatches produce notices.

Federal underreporting typically brings a notice of deficiency for the tax owed plus interest, and an accuracy-related penalty of 20% can apply where the IRS finds negligence or substantial understatement.

Massachusetts adds its own penalties: 1% per month for late filing (up to 25%), 1% per month for late payment (up to 25%), additional penalties for substantial understatement under G.L. c. 62C, § 35A, and interest at the federal short-term rate plus four percentage points, compounded daily. The Department can waive late-filing and late-payment penalties for reasonable cause, but interest cannot be waived or reduced.¹²

1
Massachusetts Department of Revenue. 2025 Form 2G Grantor/Owners Share of a Grantor-Type Trust
2
Internal Revenue Service. Instructions for Forms W-2G and 5754
3
Internal Revenue Service. Instructions for Forms W-2G and 5754 – PDF
4
Internal Revenue Service. Topic No. 419, Gambling Income and Losses
5
Internal Revenue Service. Backup Withholding
6
Mass.gov. TIR 15-14 Income Tax, Withholding and Reporting Rules for Certain Gambling Income
7
Massachusetts Department of Revenue. Massachusetts Tax Information for Gambling and the Lottery
8
Massachusetts Department of Revenue. Massachusetts 2025 Schedule X
9
Mass.gov. Personal Income Tax for Residents
10
Mass.gov. Massachusetts 4% Surtax on Taxable Income
11
Mass.gov. 2025 Form 1-NR/PY Instructions
12
Massachusetts Department of Revenue. Massachusetts Penalties and Interest Assessed by DOR