THOUSANDS of lottery winners will soon have to pay tax on their winnings – with a crucial deadline just weeks away.
With tax season in full swing, not many know that lottery earnings are also a crucial part of the process.
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All gambling winnings and losses have to be listed as income on a tax return, per Intuit Turbotax.
This may anger some who make their income on the slots, but there are specific rules to know first.
The IRS asks you to keep a diary that details your winnings and losses.
This information should include the dates and the types of wagers you put on, and importantly the amount you won or lost.
It should also detail the address of the gambling place and the names of other people present with you at the gambling establishment.
More obvious things to keep a hold of that can show your winnings include bank withdrawals and lottery tickets.
Based on how much you win in a year, you may receive a Form W-2G.
Certain winnings may have federal income taxes withheld from your prize by the gambling establishment.
There are a few criteria that allow you to withhold gambling losses, however.
You can deduct your losses if you itemize them to claim them as a tax deduction.
To do this, you have to report your gambling income and expenses separately.
It isn’t just money won at casinos, other cash sums also need submitting on tax forms.
These include cash prizes, like on a game show for example, and noncash ones like if you win a gift card.
TAX BRAIN
The tax season can often be a headache for Americans who don’t always know how to do it properly.
To calculate how much you owe, it depends if you’re a professional self-employed gambler.
If you are, you may need to pay estimated taxes each quarter.
To figure out the correct amount, you need to come up with a good estimate of the income and deductions you will report on your federal tax return.
2025 Tax Season
Tax season started on January 27 and folks must have theirs completed filed on April 15.
Those who fail to file by that time may face penalties.
However, taxpayers who need more time may file for an extension – this gives them until October 15.
The way to do this is by filling out Form 4868, the Application for Automatic Extension of Time To File U.S. Individual Income Tax Return.
This can be done by mail, online with an IRS e-filing partner, or through a tax professional.
While there’s no set schedule, the IRS revealed that taxpayers may receive refunds within 21 days of filing.
Just be sure to avoid making mistakes on any forms as that could tack on extra time.
Those filing through mail will likely get their returns within a month or could even face delays as the IRS processes millions.
As of January 31, the average refund amount totaled $1,928, per the IRS.
This is compared to the $1,395 for the same period in 2024.
The average direct deposit refund for 2025 was even higher, the IRS said, at $2,069.
To check the status of your refund, The IRS has an online tool called Where’s My Refund?
This works within 24 hours of e-filing and generally within four weeks of filing a paper return.
You could help yourself by using some of the IRS’ online tax tools that offer you support, as reported by The US Sun.
Using the online tool Where’s My Refund?, you can check the status of your income tax refund within 24 hours of e-filing and within four weeks of filing a paper return.
You will need your Social Security number or your individual taxpayer ID number, your filing status and the refund amount worked out on your tax return.
If you’re still having difficulty, you can contact the IRS if you have any questions.
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