W-2G

Why do you need to file a W-2G?

The primary purpose of Form W-2G is used to casinos, to report certain types of gambling winnings to the IRS and to the recipient of the winnings. The form is provided by the entity that paid the income to the recipient and a copy is also sent to the Internal Revenue Service (IRS). Filing a W-2G is essential for several reasons:

Income Reporting

• Gambling winnings are considered taxable income under federal tax laws. By filing Form W-2G, gambling establishments and other payers are fulfilling their obligation to report certain types of gambling winnings to the IRS.
  • Casino slot machine winnings over a certain threshold.
  • Poker tournament winnings.
  • Bingo, keno, and lottery winnings
  • Horse racing and dog racing winnings.
  • Any other type of gambling winnings subject to federal income tax withholding.

Tax Withholding

• In some cases, federal income tax must be withheld from certain gambling winnings at the time of payment. This withholding ensures that a portion of the winnings goes toward federal income tax liability. Form W-2G reports the amount of federal income tax withheld, if any.

Recipient Reporting

• Form W-2G provides recipients of gambling winnings with a record of the income they received. This is important because it helps individuals accurately report their gambling winnings on their federal income tax returns. Failing to report taxable income can lead to penalties and interest charges.

Supporting Tax Compliance

• Filing Form W-2G supports overall tax compliance and the accurate assessment of federal income taxes. It allows the IRS to cross-check the income reported by recipients with the income reported by payers, reducing the likelihood of underreporting or evasion of tax liabilities related to gambling winnings.

State Reporting

• In addition to federal requirements, some states have their own income tax laws and reporting requirements for gambling winnings. Form W-2G may serve as a basis for reporting to state tax authorities in states where gambling income is subject to state income tax.

Documentation

• The form serves as official documentation of gambling winnings and withholding for both the payer and the recipient. It provides a record of the transaction for tax purposes.

Overall, Form W-2G is an essential tool for ensuring that both gambling establishments and recipients of gambling winnings comply with federal tax laws and accurately report and pay the appropriate amount of federal income tax on taxable gambling income. It helps maintain transparency and fairness in the taxation of gambling income.

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Who needs to file a W-2G?

Form W-2G, “Certain Gambling Winnings,” is typically filed by gambling establishments and other payers who make certain types of payments to individuals or entities that are subject to federal income tax withholding. Specifically, the following parties may need to file a Form W-2G:

Gambling Establishments

• Casinos, racetracks, state lotteries, bingo halls, and other similar establishments that make payments to winners of certain gambling activities are generally responsible for filing Form W-2G.

Payers of Gambling Winnings

• Any person or entity that pays gambling winnings that are subject to federal income tax withholding is required to file Form W-2G.

Third-Party Network Providers

• In certain cases, third-party network providers that facilitate gambling transactions may be required to file Form W-2G if they are responsible for making payments to winners.

It’s important to note that Form W-2G is specifically used to report certain types of gambling winnings, and it applies to both cash and non-cash prizes. The types of gambling winnings that trigger the filing of Form W-2G include, but are not limited to:

• Slot machine winnings of $1,200 or more.
• Poker tournament winnings of $5,000 or more.
• Bingo and keno winnings of $1,500 or more.
• Lottery winnings of $600 or more.
• Horse racing and dog racing winnings of $600 or more (if the winnings are at least 300 times the amount wagered).

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Are there any exemptions to filing a W-2G?

Yes, there are exemptions and exceptions to filing Form W-2G, “Certain Gambling Winnings.” While gambling establishments and payers are generally required to report certain types of gambling winnings on Form W-2G, there are situations where reporting is not required. Here are some exemptions and exceptions to filing Form W-2G:

Winnings Below Thresholds

• Gambling establishments are not required to file Form W-2G for gambling winnings that fall below certain threshold amounts. The specific thresholds depend on the type of gambling activity.

Table Games

• Table games, such as blackjack or roulette, do not typically trigger the filing of Form W-2G by the gambling establishment. Instead, the recipient of the winnings is responsible for reporting and paying taxes on table game winnings.

Non-Cash Prizes

• Form W-2G is used to report both cash and non-cash prizes. However, non-cash prizes may have different reporting requirements. For example, the fair market value of a car or a vacation package may be reported differently than cash winnings.

Winners Who Provide TINs

• If the recipient of the gambling winnings provides a valid taxpayer identification number (TIN), such as a Social Security Number (SSN) or an Employer Identification Number (EIN), and certifies that they are not subject to backup withholding, the payer may not be required to withhold federal income tax or file Form W-2G.

Certain Types of Games

• Some types of gambling activities, such as state lotteries, may have specific rules or exemptions from Form W-2G reporting. State-specific rules and thresholds should be considered.

Exempt Organizations

• Winnings paid to certain exempt organizations, such as charitable organizations, may be exempt from Form W-2G reporting. However, reporting and withholding requirements can vary depending on the circumstances.

It’s important to note that while there are exemptions and exceptions to filing Form W-2G, recipients of gambling winnings are generally responsible for reporting their income, even if a Form W-2G is not issued. Individuals should keep accurate records of their gambling winnings and losses and report them on their federal income tax returns as required by IRS regulations.

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What is the deadline for filing a W-2G?

The deadline for filing a W-2G can vary based on the several factors:

Sending to Recipients

• The W-2G form should be furnished to the recipient by January 31 of the year following the payment year.

Filing with the IRS

• If you are filing on paper, the W-2G forms should be submitted to the IRS by February 28 (or the last day of February) of the year following the payment year.
• If you are filing electronically, the deadline extends to March 31 of the year following the payment year.

However, if any of these dates fall on a weekend or a holiday, the deadline may be extended to the next business day. Additionally, if you discover an error after the initial filing, there are separate deadlines for corrected W-2G forms.

Remember, missing these deadlines can result in penalties, so it’s crucial to stay informed and act timely.

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What is required to file a W-2G?

To file a Form W-2G, you will need certain information about both the payer (the person or business making the payment) and the recipient (the person or business receiving the payment). Here’s what is required to file a W-2G:

Information about the Payer

• Payer’s Name and Address
  • Provide your legal business name and mailing address.
• Payer’s Taxpayer Identification Number (TIN)
  • This could be your Employer Identification Number (EIN) or your Social Security Number (SSN), depending on your business structure. If you’re a sole proprietor, you might use your SSN; if you’re a business entity, you’d use your EIN.
• Payer’s Phone Number
  • Include a phone number where the payer can be reached.

Information about the Recipient

• Recipient’s Name and Address
  • Provide the legal name and mailing address of the individual or business receiving the payment.
• Recipient’s Taxpayer Identification Number (TIN)
  • This could be the recipient’s Social Security Number (SSN) if an individual or their Employer Identification Number (EIN) if a business entity.

Form specific information

• Box 1 – Reportable Winnings
• Box 2 – Date Won
• Box 3a – Type of Wager
• Box 3b – Wager Description

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What are the penalties for W-2G?

Please see the penalties section for details.

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Do you need to e-file a W-2G?

Please see the e-file section for details.

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Is state filing required for the W-2G?

Currently, 1099-Prep does not support state filing for the W-2G form. If you have a filing obligation in multiple states or are unsure about the rules for a specific state, it can be quite challenging to keep track of all the requirements. It’s advisable to consult the revenue department website of the relevant state(s) or work with a tax professional who’s knowledgeable about multi-state filing requirements.

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What elements make up a W-2G form?

The W-2G contains several boxes, each designed to report specific types of income or information. Here is a breakdown of the boxes on the W-2G:

Box 1 – Reportable Winnings

Enter payments from gambling winnings

Box 2 – Date Won

Enter the date of the winning event. This isn’t the date the money was paid if it was paid after the date of the race (or game).

Box 3 – Type of Wager

Enter the type of wager (such as raffle or 50-50 drawing) or the name of the lottery (such as Instant, Big 50, Baker’s Dozen, or Powerball) and the price of the wager

Box 4 – Federal income tax withheld

Enter any federal income tax withheld, whether regular gambling withholding or backup withholding.

Box 5 – Transaction

This depends on the type of winning:

• For Lottery:
  • For a state lottery, enter the ticket number or other identifying number
• For Bingo
  • Enter the ticket number, card number (and color, if applicable), machine serial number, or any other information that will help identify the winning transaction.
• For Poker Tournament
  • Enter the name of the tournament and its sponsor.

Box 6 – Race

Enter the race (or game) applicable to the winning ticket.

Box 7 – Winnings from identical wagers

Enter the amount of additional winnings from identical wagers.

Box 8 – Cashier

Enter the initials of the person paying the winnings.

Box 9 – Winner’s taxpayer identification no.

This is required information. Enter the TIN of the person receiving the winnings. For an individual, this will be the social security number (SSN) or individual taxpayer identification number (ITIN). If the winner fails to give you a TIN, backup withholding applies. See Withholding under Bingo, Keno, and Slot Machines, earlier.

Box 10 – Window

Enter the location of the person paying the winnings, if applicable.

Box 11 – First I.D.

As verification of the name, address, and TIN of the person receiving the winnings, enter the identification numbers from two forms of identification. Acceptable forms of identification include a driver’s license, passport, social security card, military identification card, tribal member identification card issued by a federally recognized Indian tribe, voter registration card, or completed and unmodified Form W-9. Enter the number and the state or jurisdiction. In some instances, the number may be the same number as in box 9.

One of the two forms of identification that the recipient presents must include the recipient’s photograph. Gaming establishments owned or licensed by a tribal government may waive the photo ID requirement for payees who are members of that federally recognized Indian tribe and present a tribal member identification card issued by the same tribal government.

Box 12 – Second I.D.

As verification of the name, address, and TIN of the person receiving the winnings, enter the identification numbers from two forms of identification. Acceptable forms of identification include a driver’s license, passport, social security card, military identification card, tribal member identification card issued by a federally recognized Indian tribe, voter registration card, or completed and unmodified Form W-9. Enter the number and the state or jurisdiction. In some instances, the number may be the same number as in box 9.

One of the two forms of identification that the recipient presents must include the recipient’s photograph. Gaming establishments owned or licensed by a tribal government may waive the photo ID requirement for payees who are members of that federally recognized Indian tribe and present a tribal member identification card issued by the same tribal government.

Box 13 – State/Payer’s state no

This box indicates the state for which the income and tax details are being reported. It will also include the payer’s state identification number, which is an identifier assigned by the state’s revenue or taxation department.

Box 14 – State Winnings

Enter the amount of state winnings.

Box 15 – State income tax withheld

Enter the amount of state income tax withheld.

Box 16 – Local winnings

Enter the amount of local winnings.

Box 17 – Local income tax withheld

Enter the amount of local income tax withheld.

Box 18 – Name of locality

This is the name of the locality referenced in Box 16 and 17

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Can you correct a W-2G?

Yes, you can correct a W-2G. Please see the corrections and negations section for details.

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