If you live in New York, there is no way to escape paying taxes. Every year, the federal government’s Internal Revenue Service (IRS) and the Department of Taxation and Finance of the state levy a tax on your personal income.
Residents of New York City and some of Yonkers are also subject to a municipal income tax. Your gains are also taken into account if you gamble for a year.
It doesn’t matter how you won the gamble. It can be a horse race, slot jackpot, beat the house at blackjack, etc. You have to pay taxes on all your winnings if you are a New York resident.
Continue to know about the essential rules of New York Gambling Taxes.
Is It Legal To Online Gamble In New York?
The gambling market in New York State is flexible compared to its neighbors, Pennsylvania and New Jersey. Anyone over the age of 21 can bet online in any category, including sportsbook apps, online casinos, or poker sites.
Governor Andrew Cuomo signed a measure into law in April 2021 that effectively legalized internet sports betting in New York State.
New Yorkers can also legally gamble on any online gaming platform in Pennsylvania or New Jersey.
You only need to be physically within state lines to place real-money wagers, although neither state has residence requirements. Visit here to find the best online casinos.
If you want to play the lottery or wager on horses in New York, you must be 18 years old or older. To play in a New York casino, you must be 18 years old or older unless the establishment serves alcohol. To visit a New York casino that serves alcohol, you must be 21 years old or older.
1. Tax Rates
Their annual income and tax bracket determine a New York resident’s tax rate. However, the gambling wins are added to the annual income, and the tax is charged by the authorities accordingly.
Your marginal tax rate is the tax bracket in which you earn the least amount of money. After deductions, your effective rate is the actual percentage you pay. Depending on your taxable income in New York, the state tax rate ranges from 4% to 8.82 percent.
A filer who lives in New York City, which has its own income tax, will owe an additional 3.876 percent. The tax rates used in these computations are estimations, and they may vary. To prevent making costly mistakes, seek advice from a tax specialist or accountant.
2. Report The Winnings
Winnings that exceed a certain threshold will automatically be reported to the IRS. The individual (sportsbook, casino, lottery operator, etc.) fills out the W-2G Form, which shows the amount won and how much tax, if any, was withheld from the payout.
If gambling winnings surpassed any of the following minimum levels during the preceding calendar year, bettors should expect to get a W-2G Form:
- Poker tournaments with a prize pool of $5,000 or more (even if reduced by the buy-in amount)
- If you win more than $1,200 at slot machines or bingo
- $600 or more from sports betting or any other pari-mutuel event (horse racing, for example), as long as the payoff was at least 300 times the stake.
- $600 or more from daily fantasy sports
If the reward was not in cash, such as a car or a yacht, the fair market value of each prize should be disclosed.
If gambling winnings in New Jersey or other states reach $5,000, New Yorkers may be obliged to file a non-resident return. Include the winnings on your federal and New York income tax returns even if the threshold was not met.
You must list all your gaming earnings as “Other Income” on Form 1040, Schedule 1, Line 8,
3. Report Without W-2G Form
If you didn’t meet the automatic withholding threshold on your gambling winnings, you wouldn’t get a Form W-2G. Nonetheless, all gambling earnings are considered taxable income by the IRS. That begs the question: without a W-2G, how can you figure out your prior year’s wins and losses?
The IRS requires all gamblers to keep accurate records of their gambling activities. As a result, players should keep all relevant betting records and receipts in their possession.
One advantage of online gambling is that your operator(s) can give an electronic record of all your wagers from the previous year, making it simple to track profits and losses.
4. The Deductibles
You can deduct your gambling losses for the year from both the IRS and the state of New York. Remembering that you can only do so if you itemize your deductions on both returns is crucial.
If you use the standard deduction, you will lose this benefit. Whether or not you should itemize is determined by the number of deductions you have and the standard deduction amount for your tax bracket.
There are two key points to keep in mind here:
- Even if you genuinely lost more than you won over the course of the year, you can’t deduct more than you won.
- Only the amount you really lost while gambling can be deducted. The cost of your food, housing, and other expenses incurred while gaming is not tax-deductible.
When deducting losses, many people make the error of simply subtracting their losses from their earnings and then reporting the difference as their year’s winnings. Separate the two amounts of money.
This kind of reporting can lead to underreporting, which can result in fines and interest. Furthermore, if you deduct your losses, you must keep accurate records of your gambling for at least five years.
Don’t forget your tax duties if you participate in newly licensed sports betting, lotteries, raffles, animal races, casino games, or other activities. Keep meticulous records of your activities and, if necessary, get advice from a tax specialist to ensure that you comply with state and federal gaming tax regulations while also maximizing any extra deductions available under tax reform.