How to Report Gambling Winnings to IRS?
Specific requirements for reporting certain gambling winnings may differ depending on the type of gambling, the amount won, and the ratio of the winning to the wager. The IRS has issued detailed Instructions for Forms W-2G and 5754 with a step-by-step guide for completing the report. The document is brief and most of its fields are self-explanatory. You can find detailed instructions for the form on the IRS website or by following this link. General Form W-2G instructions are as follows:
- Enter the date of the winning transaction or winning event in Box 2. It may not be the date the money was actually paid;
- Note that there are two types of federal tax withholdings: regular and backup. The payment can be subject to one type of withholding only. Always report the amount you withheld in Box 4;
- You do not need to complete Boxes 13 through 18 for the IRS. Fill them out only if required by your state or local department;
- Do not report payments of gambling winnings to nonresident foreign persons or foreign entities on this form. Use IRS Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding instead;
- The recipient of the winning must furnish you with the completed IRS Form 5754, Statement by Person(s) Receiving Gambling Winnings if the recipient is not the actual winner or the recipient is in the group sharing the same winning. Use it to prepare your IRS W-2G Form.
How to File Form W-2G?
You can report gambling winnings to the IRS in two ways: electronically and by mail. If filing electronically, Form W-2G due date is March 31. If sending by mail, the deadline is February 28. Provide Copies B and C as well as Copy 2 (if required) to the winner by January 31. Failure to file on time results in the following penalties:
- $50 per form for filing within 30 days after the deadline;
- $110 per form for filing by August 1;
- $270 per form for filing after August 1 or not filing.
Enclose Form 1096, Annual Summary and Transmittal of U.S. Information Returns if you submit a paper version of the form to the IRS. Do not cut or staple the forms you file with the IRS.
If you file Form W-2G electronically, do it through the Filing Information Returns Electronically System (FIRE System). To use it, you need to have a software that allows you to upload your completed form in the proper format since the FIRE System does not provide a fill-in form option. The system is easy to use and operates 24/7. Note that if you file 250 and more forms, you must file them via the FIRE System. For failure to file electronically when required, the IRS may subject you to penalties up to $270 per form, unless you provide a valid explanation for the delay.
Where to Mail Form W-2G?
The mailing address for reporting gambling winnings and losses to the IRS depends on your location. Find the address you need in the IRS-distributed General Instructions for Certain Information Returns (Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, and W-2G).
IRS W-2G Related Forms
- IRS Form W-2, Wage and Tax Statement. Complete this form if you are an employer with one or more employees and have paid them more than $600 in wages;
- IRS Form W-2C, Corrected Wage and Tax Statements. File this document to make amendments to the IRS Forms W-2, W-2AS, W-2CM, W-2GU, W-2VI, or W-2C already filed with the SSA;
- IRS Form W-2AS, American Samoa Wage and Tax Statement. Submit this version of the W-2 form to report American Samoa wages and withheld taxes;
- IRS Form W-2GU, Guam Wage and Tax Statement. Fill out this document to provide information about Guam salaries and taxes deducted from these salaries;
- IRS Form W-2VI, U.S. Virgin Islands Wage and Tax Statement. Use this form to inform your employees and the appropriate authorities about the United States Virgin Islands wages and withheld taxes.