How Much Taxes Do You Pay On Casino Winnings In California

That’s because you have to pay taxes on all gambling winnings. Whether you bet on the big games; Superbowl, Stanley Cup, NBA Playoffs, World Series on the games during March Madness, here’s what you need to know about how sports gambling impacts your 2019 taxes. Here are the rules. This means that you will pay 15.3% in taxes placing poker income under a Schedule C, where adding it on a 1040 as Other Income will not trigger this tax. The total percentage in 2012 was 13.3% due to the Social Security tax reduction during the recession. Schedule C filers will be able to deduct 6.2% of the tax as a business expense.

1. How Much Taxes Do You Pay On Casino Winnings In California Today
2. How Much Taxes Do You Pay On Casino Winnings In California Now
3. How Much Taxes Do You Pay On Casino Winnings In California State

How Much Taxes Do You Pay On Casino Winnings In California Today

Gambling winnings, even if there’s a net loss for the year, and game show winnings can increase the cost of health insurance premiums for low-income individuals or families who obtain their insurance through the Marketplace and, in some cases, those enrolled in Medicare coverage.
We all know how tangled a web our tax laws are, and adding Obamacare to the equation has created this oddity.
Although the Chief Counsel Advice Memorandum (CCAM 2008-011) introduced the concept of “gambling sessions,” which essentially nets winnings and losses for those who follow the required record keeping rules, taxpayers generally cannot net their winnings and losses on their tax returns. The total gambling winnings are included in the adjusted gross income (AGI) for the year, and while the losses are deducted as an itemized deduction and limited to an amount not exceeding the reported winnings for the year.

How Much Taxes Do You Pay On Casino Winnings In California Now

Thus, whether or not a taxpayer itemizes deductions and deducts their gambling losses, the full amount of the gambling winnings is included in their AGI; their AGI is used to determine their household income, which in turn is used to determine the amount of premium tax credit (PTC) to which the taxpayer is entitled. The higher the income, the lower the PTC, and the lower the PTC, the higher the insurance premiums.

How Much Taxes Do You Pay On Casino Winnings In California State

If gambling winnings exceed certain thresholds based on the type of the taxpayer’s gambling and the amount won, then the casino, poker palace or racetrack is required to send the taxpayer and the IRS a Form W-2G that shows the winnings, so you can be sure the IRS will be aware of their gambling income. Even if losses for the year exceed the taxpayer’s winnings or the taxpayer doesn’t receive a W-2G form, the IRS expects winnings to be reported, which will increase the taxpayer’s AGI and likely also their Marketplace-purchased insurance premiums.

Similarly, if a taxpayer wins goods on a game show, the taxpayer may also receive a W-2G, adding to their AGI for the year. Even if they give any of the goods to charity, that would, like gambling losses, be an itemized deduction.

Although impacting very few, the scenario also applies to taxpayers on Medicare. An individual’s Medicare B and D premiums are based on their AGI from two years prior. Thus, a taxpayer who had gambling winnings from two years back could see increases in both their monthly Medicare B premiums and supplement for the Medicare D (prescription drug coverage). However, the Medicare premium increase generally impacts higher-income individuals who can more easily deal with the increased costs.