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The types of gambling are discussed in these instructions

1. The winner pays the withholding tax to the payer. In this

under the following four headings.

case, the withholding is 24% of the FMV of the noncash payment

minus the amount of the wager.

1. Horse Racing, Dog Racing, Jai Alai, and Other Wagering

Transactions Not Discussed

Later.

2. The payer pays the withholding tax. In this case, the

2. Sweepstakes, Wagering Pools, and

Lotteries.

withholding is 31.58% of the FMV of the noncash payment

3. Bingo, Keno, and Slot

Machines.

minus the amount of the wager.

4. Poker

Tournaments.

If you use method 2, enter the sum of the noncash payment

and the withholding tax in box 1 of Form W-2G and the

Reportable Gambling Winnings

withholding tax paid by the payer in box 4.

Report gambling winnings on Form W-2G if:

1. The winnings (not reduced by the wager) are $1,200 or

Backup Withholding

more from a bingo game or slot machine,

You may be required to withhold 24% of gambling winnings

2. The winnings (reduced by the wager) are $1,500 or more

(including winnings from bingo, keno, slot machines, and poker

from a keno game,

tournaments) for federal income tax. This is referred to as

3. The winnings (reduced by the wager or buy-in) are more

backup withholding. You should backup withhold if:

than $5,000 from a poker tournament,

The winner doesn't furnish a correct taxpayer identification

number (TIN),

4. The winnings (except winnings from bingo, slot machines,

Regular gambling withholding hasn't been withheld, and

keno, and poker tournaments) reduced, at the option of the

The winnings are at least $600 and at least 300 times the

payer, by the wager are:

wager (or the winnings are at least $1,200 from bingo or slot

a. $600 or more, and

machines or $1,500 from keno or more than $5,000 from a poker

b. At least 300 times the amount of the wager, or

tournament).

5. The winnings are subject to federal income tax

Figure any backup withholding on the total amount of the

withholding (either regular gambling withholding or backup

winnings reduced, at the option of the payer, by the amount

withholding).

wagered. This means the total amount, not just the payments in

Tax-Exempt Organizations

excess of $600, $1,200, $1,500, or $5,000, is subject to backup

withholding.

A tax-exempt organization conducting gaming activities may be

required to withhold income tax and report on Form W-2G. See

Report the amount you withheld in box 4 of Form W-2G. Also

Pub. 3079, Tax-Exempt Organizations and Gaming.

file Form 945 to report all backup withholding. You may use

Form W-9, Request for Taxpayer Identification Number and

Withholding

Certification, to request the TIN of the recipient.

There are two types of withholding on gambling winnings: (a)

regular gambling withholding at 24% (31.58% for certain

See the following instructions for each type of gambling for

noncash payments) and (b) backup withholding at 24%. If a

detailed rules on backup withholding.

payment is already subject to regular gambling withholding, it

isn't subject to backup withholding.

Foreign Persons

Payments of gambling winnings to a nonresident alien individual

Regular Gambling Withholding for Certain Games

or a foreign entity aren't subject to reporting or withholding on

You may be required to withhold 24% of gambling winnings for

Form W-2G. Generally, gambling winnings paid to a foreign

federal income tax. This is referred to as regular gambling

person are subject to 30% withholding under sections 1441(a)

withholding. Withhold at the 24% rate if the winnings minus the

and 1442(a) and are reportable on Form 1042, Annual

wager are more than $5,000 and are from:

Withholding Tax Return for U.S. Source Income of Foreign

Sweepstakes,

Persons, and Form 1042-S, Foreign Person's U.S. Source

Wagering pools,

Income Subject to Withholding. Winnings of a nonresident alien

Lotteries,

from blackjack, baccarat, craps, roulette, big-6 wheel, or a live

Wagering transactions in a pari-mutuel pool with respect to

dog or horse race in the United States from legal wagers initiated

horse races, dog races, or jai alai, if the winnings are at least 300

outside the United States in a pari-mutuel pool aren't subject to

times the amount wagered, or

withholding or reporting. See Pub. 515, Withholding of Tax on

Other wagering transactions, if the winnings are at least 300

Nonresident Aliens and Foreign Entities.

times the amount wagered.

State Tax Information

Regular gambling withholding doesn't apply to winnings from

bingo, keno, or slot machines, nor does it apply to winnings from

Boxes 13, 14, and 15 and Copies 1 and 2 are provided for your

other wagering transactions if the winnings are $5,000 or less.

convenience only and don't have to be completed for the IRS. If

However, see

Backup

Withholding, later.

you withheld state income tax on a payment of gambling

winnings, you may enter it in box 15 of Form W-2G. If you do,

Regular gambling withholding is figured on the total amount

also complete boxes 13 and 14. A state identification number

of gross proceeds (the amount of winnings minus the amount

(box 13) is assigned by each individual state.

wagered), not merely on the amount in excess of $5,000.

If a state tax department requires you to send it a paper copy

Report the amount you withheld in box 4 of Form W-2G. Also

of Form W-2G, use Copy 1 for that purpose. Give Copy 2 to the

file Form 945, Annual Return of Withheld Federal Income Tax, to

winner for use in filing a state income tax return.

report all your gambling withholding.

Local Tax Information

Noncash payments. A noncash payment, such as a car in a

sweepstakes, wagering pool or lottery, must be taken into

Boxes 16, 17, and 18 and Copies 1 and 2 are provided for your

account at its fair market value (FMV) for purposes of reporting

convenience only and don't have to be completed for the IRS. If

and withholding. If the FMV exceeds $5,000, after deducting the

you withheld local income tax on a payment of gambling

price of the wager, the winnings are subject to 24% regular

winnings, you may enter it in box 17 of Form W-2G. If you do,

gambling withholding. The tax you must withhold is computed

also complete boxes 16 and 18.

and paid under either of the following two methods.

-2-

Instructions for Forms W-2G and 5754 (2018)

Instructions For Forms W-2g And 5754 - Certain Gambling Winnings And Statement By Person(S) Receiving Gambling Winnings - 2018 Page 2

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