Georgia Gambling and Taxes

Presently, Georgia has a very limited number of legal gambling options. Even so, if you win money from gambling in Georgia, you still have to pay taxes on your winnings, much as you do elsewhere.

Georgia considers gambling winnings a form of ordinary income. So does the US government. As a result, you must pay income tax on your gambling winnings in the state. Therefore, if you do win money playing the Georgia Lottery (for instance), you should be prepared to pay taxes on those winnings.

Here’s a rundown of all you need to know about paying taxes on your gambling winnings in Georgia.

Does Georgia tax gambling winnings?

Much like other states, Georgia considers gambling winnings personal income. So does the Internal Revenue Service. That means when you win money from gambling, you increase your overall income. If you win enough from gambling, you can potentially move yourself up into a higher tax bracket, thereby affecting your tax rate.

In Georgia, the state income tax ranges from 1% to 5.75%. Practically speaking, only the lowest earners pay less than 5.75% income tax. Meanwhile, your federal income tax obligation is also based on how much you make each year. People in the lowest bracket pay 10% federal income tax, while those in the highest pay 37%.

Georgia state tax rate on gambling winnings

Here is a breakdown of the 5.75% tax rate that most people in Georgia pay to the state. As you can see, it actually works out to a slightly lower percentage overall: 

  • Single: Earn $7,000 or more — pay $230 plus 5.75% of everything over $7,000.
  • Married filing separately: Earn $5,000 or more — pay $170 plus 5.75% of everything over $5,000.
  • Married filing jointly (or head of household): Earn $10,000 or more — pay $340 plus 5.75% of everything over $10,000.

For those Georgians who already earn enough income to pay the highest income tax rate of 5.75%, increasing their overall income with gambling winnings actually won’t affect the percentage of state tax they owe. Only those who earn below the thresholds listed above might find themselves moving up, say, from having to pay 1% to 2% state income tax, or 5% to 5.75%.

How do I report gambling winnings to the state of Georgia?

When you fill out your Georgia state tax return, you must enter your federal adjusted gross income as it appears on your federal tax return, Form 1040. When you calculated that total, you should have included your gambling winnings (see below for an explanation). That means the income you report on your state return will also include your gambling winnings.

There is an additional section on the Georgia state return where you can enter income from any W-2 or 1099 forms you might have received. There you can also list taxes withheld. Then on separate lines you add up all of your taxes withheld and enter that total. This ensures you receive credit for tax you’ve already paid on gambling winnings as you calculate your overall state tax obligation.

Note that when you win above a certain amount when playing the Georgia Lottery, it will automatically report your winnings to the Georgia Department of Revenue as well as to the IRS. However, you still have to report your winnings when filling out your tax returns. 

How much federal tax do I owe on my gambling winnings?

Your federal tax obligation on gambling winnings also depends on your overall income. If you win a lot from gambling, you can push yourself up into a higher tax bracket and thus will need to pay a higher percentage of your income in taxes. 

As with Georgia state taxes, how you file also affects which bracket you fall into (e.g., single, married filing jointly, married filing separately). 

We won’t list all the federal tax brackets here, but know that when it comes to federal taxes, individuals making around $10,000 or less are in the lowest category (paying 10%), while those making over $500,000 find themselves in the highest (paying 37%).

How to use IRS Form W-2G

When you win money gambling, you sometimes will receive a Form W-2G. Especially if you win a large amount, the gambling provider will issue you one of these forms. In Georgia, it is the Georgia Lottery that issues the most Form W-2Gs. In other states like nearby Florida, you’ll find that casinos, card rooms, and racetracks often provide these forms to winners.

If you receive a Form W-2G, the IRS also receives a report of your win. The form will list the amount you won as well as the amount of withheld tax. Sometimes that amount will be zero, and other times not. 

In most cases, you have to win a certain minimum while gambling to receive a Form W-2G. Here are the typical thresholds, although not all of these forms of gambling are actually legal in Georgia:

  • $1,200 and above while playing bingo or slots (not reduced by the amount of your wager).
  • $1,500 and above from keno (reduced by the wager).
  • $5,000 and above from poker (reduced by the wager or tournament buy-in).
  • $600 and above (or at least 300 times your wager) from other types of gambling.

At the moment, only the first and last items on this list are relevant to Georgians. There are legal bingo games in the state along with other forms of charitable gaming such as raffles. However, slots, keno, and poker are all essentially illegal in Georgia. (There are a few exceptions, e.g., poker clubs operating according to rules for charitable gaming.)

Meanwhile, if you win $600 or more at any other type of legal gambling, such as when playing the Georgia Lottery, you will receive a Form W-2G.

Transferring information from your W-2G to your federal income tax return

When you receive an IRS Form W-2G, you’ll see that it lists all of your personal information on the left side of the form. Then over on the right are numbered boxes, some of which will contain figures. Only a couple of these matter to your federal tax return.

Box 1 shows your “Reportable winnings.” That’s the amount you’ve won. Box 4 shows “Federal income tax withheld.” If the gambling provider withheld any taxes from your winnings, that amount will appear here.

When you fill out Form 1040, Line 8 is where you’ll enter “Other income.” Take the total from Box 1 of Form W-2G, add any other gambling winnings you have, and enter that on Line 8. If you have multiple Form W-2Gs, add up all the winnings from each and then enter the total. If you have other types of miscellaneous income, you might need to complete a Form 1040, Schedule 1 to help you calculate your overall “Other income.” 

Be sure to note any withholdings on your Form W-2G (as noted in Box 4). If so, you’ll want to list that total on Line 25c of Form 1040 where you report any “Federal income tax withheld from” your “other forms.” Again, if you have multiple W-2Gs, check them all and add up the total withholdings from your winnings before entering them onto Form 1040. 

If you use tax preparation software, you can simply follow the directions and enter the amounts from your W-2Gs where necessary. The program will automatically make the calculations and enter totals where required.

Do I have to pay tax on Georgia Lottery winnings?

Yes, you do. Any prize you win playing the Georgia Lottery is subject both to federal and state income taxes. Indeed, since the Georgia Lottery is by far the most popular legal form of gambling in the state, any winnings are likely the most common cause of gambling-related tax questions.

If you win $600 or more playing the lottery in Georgia, the Georgia Lottery Corp. will report that to both the IRS and to the Georgia Department of Revenue. You’ll also receive one of those W-2Gs that we talked about above. That means you should be prepared to report those gambling winnings when you complete both your federal tax return and your Georgia state tax return. 

As we already mentioned, you’ll calculate your gambling winnings on your federal return, and those winnings will then become part of the federal adjusted gross income you are declaring. You’ll then be transferring that total over to your Georgia state return, as well.

Even if you’ve won less than $600, you are still technically supposed to include those winnings as part of your income. Such a small amount probably isn’t going to affect your tax obligation, unless it happens to bump you up into a higher tax bracket. Even though the IRS or the Georgia Department of Revenue may not be too concerned if you neglect to report a small lottery win of less than $600, it is better to be safe than sorry.

Does the Georgia Lottery automatically withhold tax from winnings?

The GLC only withholds tax from your lottery winnings for prizes of $5,000 and above. If you’re lucky enough to win a prize that large, you’ll notice when you claim your prize that the GLC will have withheld 5.75% of your winnings for Georgia state income tax and 24% of your winnings for federal income tax. The Form W-2G you receive will also reflect this.

Be aware that your actual tax obligation on those winnings might ultimately be different from the withholding at the time you collect your prize. Your Georgia state tax obligation will likely be right around 5.75%. However, your federal tax obligation could be less than 24% or much more, even as much as 37% depending on how much total income you earn during the year.

In other words, when the GLC withholds money from your prize for federal and state taxes, the amount is essentially an estimate of what you will ultimately owe. 

Note that if you win $2,500 or more playing the lottery, the GLC will check for any outstanding child support payments and deduct them from your winnings, if applicable. Similarly, if you win $5,000 or more, the GLC will do the same for any outstanding student loans or unpaid state taxes. 

Georgia gambling taxes FAQ

What is the penalty if I fail to report gambling winnings to the state of Georgia or to the IRS?

Not reporting gambling winnings on your federal or state taxes can potentially cause you a lot of trouble and hardship. You could face having to pay additional taxes, fines and/or interest. If you received a Form W-2G reflecting your gambling winnings and then don’t report them, the IRS will probably send you an underreported income notice and potentially hit you with additional penalties. You also increase the likelihood of an audit if you fail to report gambling winnings, especially if the IRS and/or the Georgia Department of Revenue already received a report of those winnings.
Gambling is inherently an activity that involves taking risks. But you don’t want to take further risks and not report your winnings when filing your taxes. 

I won a non-cash prize playing coin operated amusement machines in Georgia. Do I have to pay taxes on those winnings?

Generally speaking, you are supposed to report non-cash prizes that you win from gambling as income. Say you win a motorboat in a raffle. You would need to determine the motorboat’s value and include that amount in your gambling winnings when filing your taxes.
Coin operated amusement machines are very popular in Georgia. Those who play COAMs can win a variety of prizes, including gift certificates, lottery tickets, in-store merchandise, gasoline, toys and other novelties. However, according to the law, COAMs are not supposed to feature cash prizes. At present, the maximum cash value for COAM prizes is $5, although legislators are trying to increase that limit.
The Georgia Department of Revenue and the IRS do not receive reports of COAM winnings. Since the cash value of each prize you might win from COAMs is relatively small, there likely is no need to worry too greatly about reporting those winnings. That said, if you have any concerns or questions, you should consult a tax adviser. 

As a Georgia resident, do I have to pay taxes on the money I win gambling in another state?

In most states, gambling providers do not report small wins of less than $600 to the IRS or state tax agencies. That said, technically you still must report all gambling winnings when filing your federal and state tax returns. Therefore, if you are a Georgian and win money gambling in another state, be prepared to pay taxes on those winnings.
Note that if you win an especially large amount of money in another state (e.g., $5,000 or more), both federal and state taxes will likely be withheld from your prize right away. If that happens, you’ll want to report those withholdings to ensure you receive credit for having already paid.

I am not a Georgia resident, but while visiting the state I won some money playing the lottery. Do I need to pay Georgia state taxes on my winnings?

It depends on how much you won.
Nonresidents are only required to file a Georgia state tax return if they receive income from Georgia sources, including lottery winnings. Whenever anyone wins $600 or more, the Georgia Lottery will report that win to the IRS and to the Georgia Department of Revenue. You’ll also receive a Form W-2G you can use to help when reporting your gambling winnings on your federal return. As noted above, for wins of $5,000 and higher, the Georgia Lottery will go ahead and withhold both state and federal income tax from your winnings. 
The practical consequence is that for small Georgia Lottery wins (i.e., less than $600), nonresidents don’t need to worry about filing a Georgia state tax return. Even if you win more than that, you also might not need to do so. For nonresidents, if your overall Georgia income totals no more than $5,000 or no more than 5% of your overall income (whichever is less), you do not have to file a GA state tax return.
That said, keep in mind that nonresidents should still plan to report their gambling winnings in Georgia on their own state returns, as well as on their federal returns.

How do I use Form 1099-MISC to report gambling income?

Sometimes, after winning money from gambling, you might receive an IRS Form 1099-MISC reflecting how much you have won. This is a standard “miscellaneous” income form you might receive for other reasons, too, such as for doing freelance work or for other types of income outside of regular employment. 
For gambling winnings, you’ll see the amount listed in Box 3 (“Other income”) of Form 1099-MISC. Take that amount, add it to whatever other gambling winnings you received (including from any Form W-2Gs you might have received), and enter the total as your “Gambling income” on your state and federal tax returns.

When reporting gambling income, can I deduct for losses?

You can deduct losses when reporting gambling income on your tax return, but only if you itemize all of your deductions. You can’t do it if you take the standard deduction.
When filing your federal return, you can use Form 1040, Schedule 1 (discussed above) to calculate and deduct gambling losses. You can’t just subtract losses from winnings, either, and report the difference as winnings only. You have to calculate losses separately. You also can’t deduct more than you have won (even if you lost more than you won). Additionally, you can only deduct money that you spent gambling. You can’t count associated expenses such as travel to a poker tournament. 
Generally speaking, only professional gamblers are likely to benefit from deducting losses when they report gambling income.