Gambling winnings are fully taxable. They include everything from large lottery and sweepstakes payouts to money you win playing bingo and items you win in a raffle. If you win a noncash prize, which can be anything from a bottle of booze to a car, you must include its fair market value when figuring your income. If you itemize your deductions, you can deduct your gambling losses for the year up to the amount that you report as gambling winnings.
If you win more than $5,000, taxes will automatically be withheld at a flat 25% rate. This is true whether your winnings come from a state lottery or a church raffle. Taxes will also be withheld if you win more than $5,000 from any type of wagering and your winnings are at least 300 times the bet. This includes bets that you place on dog or horse races or jai alai matches. Winnings from bingo, keno, or slot machines are not generally subject to withholding.
You should receive a copy of Form W-2G showing the amount you won and the amount of tax withheld. Even if you don’t receive a Form W-2G, you should include your winnings on your tax return.