How does gambling taxes work if I won $1,200? Do I have to pay taxes on that amount?

Yes, gambling winnings are taxable income that must be reported on your tax return. For slot machine winnings of $1,200 or more, the casino is required to issue you a Form W-2G at the time of the win. They should have taken your information when you collected your winnings. You can deduct your gambling losses, but only if you itemize deductions on Schedule A, and only up to the amount of your winnings. So in your case, you could potentially deduct that $300 you lost, but only if you itemize rather than take the standard deduction. Also, you need to keep good records of both your winnings and losses (receipts, tickets, statements, etc.).

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Something nobody's mentioned yet - if you gamble in a different state than where you live, you might have to file a nonresident tax return for that state too. I won about $2000 in Vegas last year and had to file a Nevada return even though they don't have income tax, and then also report it on my home state return. Just something to keep in mind!

Keep in mind that the W-2G reporting threshold varies depending on what type of gambling it is! Slots are $1,200+, but keno is $1,500+, and poker tournaments have a $5,000+ threshold. And for sports betting/horses, they only issue a W-2G if the winnings are at least $600 AND 300x your wager. It's super confusing.

One thing to add that might help - even though you lost $300 before hitting the jackpot, make sure you have some kind of documentation for those losses if you plan to deduct them. The IRS expects you to keep records like receipts, losing tickets, or even a gambling diary with dates, locations, and amounts. Since this was all in one trip, you might be able to use your credit card or bank statements showing ATM withdrawals at the casino as supporting documentation for your losses. Just winning $1,200 and losing $300 on the same day at the same casino should be pretty straightforward to document compared to tracking losses over multiple trips throughout the year. Also, definitely make sure the casino gave you that W-2G form when you collected your winnings - if they didn't, you should contact them to get it since they're required to issue one for slot wins of $1,200+.

Just to clarify something that might be confusing from the other responses - you absolutely DO need to report that $1,200 as taxable income on your federal return, regardless of whether you itemize deductions or take the standard deduction. The gambling winnings get reported as "Other Income" on your 1040. The loss deduction piece is separate and optional - you can only deduct gambling losses if you itemize deductions AND only up to the amount of your winnings. So if you normally take the standard deduction (which most people do), you'd pay taxes on the full $1,200 and wouldn't be able to deduct that $300 loss. Make sure you received the W-2G form from the casino when you collected your winnings - they're required to give it to you at the time of payout for slot wins of $1,200 or more. You'll need that form to complete your tax return. If you didn't get it or lost it, contact the casino's player services department to get a copy.

One thing that helped me when I was in a similar situation was keeping track of the exact time and date of both my losses and winnings during that casino visit. Since you mentioned losing $300 before hitting the $1,200 jackpot all in the same trip, you might want to check if your player's club card tracked those transactions automatically. Many casinos keep detailed records of your play when you use their rewards card, and you can often request a win/loss statement from them that shows all your activity for that day. This can serve as official documentation for both your winnings and losses, which is really helpful if you do decide to itemize deductions. Even if you end up taking the standard deduction, having that documentation is good to keep for your records in case the IRS ever has questions about your return. Also, don't forget that if any taxes were withheld from your winnings (which sometimes happens on larger jackpots), that information should be on your W-2G form and you can claim those withholdings as payments made toward your tax liability.