Withholding and Reporting Requirements

Federal Tax Requirements for Gambling Prizes

The Internal Revenue Service (IRS) requires certain gambling prizes be taxed and reported. Requirements depend on:

  • the type of event.
  • the amount of the prize.
  • whether or not the winner provides proper identification and a social security number.

For non-cash prizes, fair market value is used to determine requirements. Licensees who fail to comply may be held liable by the IRS for the tax.

IRS Publication 3079 covers rules for withholding and reporting. For a free copy, call the IRS at 1-877-829-5500 or download it directly from the IRS website (PDF) ». Consult the annual instructions that accompany IRS W-2G » for the most current information.