How Gambling Winnings Are Taxed When you collect your winnings, the payer will deduct 24% of the total for taxes. They also will give you a copy of IRS Form W-2G to record the transaction if you win a substantial amount of money in any legally operated game of chance.3 What is a...
Lottery winnings are considered ordinary taxable income for both federal and state tax purposes. That means your winnings are taxed the same as your wages or salary, and you must report the entire amount you receive each year on your tax return. For example, let’s say you elected to receiv...