If you hit it big betting at an internet casino in New Jersey, do you keep it all — or does the IRS or New Jersey Division of Taxation take some? It's a question that arises if you're gambling in the Garden State. There's a lot of misinformation on the web, so we've consulted a few sources to break out whether New Jersey gambling winnings are subject to taxation.
Whether you're scooping up low-stakes victories or redeeming high roller casino bonuses, you need to understand how your gambling wins are taxed. Understanding not only keeps you compliant but also prevents tax time surprise.
Legal Summary: New Jersey Taxation of Gambling Winnings
The following is what you need to know about New Jersey taxation of gambling winnings:
- All gambling winnings are tax federals in the United States, regardless of how small.
- New Jersey also counts gambling winnings as your gross income for tax purposes.
- Prizes from lotteries, slot machines, poker tournaments, and sports betting all need to be reported on state and federal tax returns.
- W-2G forms are provided by casinos for winnings over certain amounts ($1,200 for slot machines or $5,000 for poker tournaments).
- If your total winnings are large, you will also be required to make estimated tax payments throughout the year.
When Am I Required to Pay Taxes?
You are required to report and pay tax on gaming winnings when:
- You win at a licensed land-based or online New Jersey casino.
- You place sports bets with authorized NJ sportsbooks either online or in person.
- You get interest on your win — for example, by putting a big amount into a savings account.
Fact: The income remains reportable as mandated by law even if you don't receive a W-2G form.
Can You Escape Paying Taxes?
No — gambling winnings are never tax-free in the US. But there are a couple of things that you can legally do to reduce your tax liability:
1. Keep a record of your gambling losses
When you are reporting itemized deductions, you can deduct your gambling losses to the limit of your winnings. Simply keep clear records, including:
- Wagering tickets
- Bank statements
- Win/loss reports from the casino
2. Gamble at Legal, Licensed Casinos
Bet at places that have a permit from the Gaming Police. Not only is this okay but it makes sure your wins are real and safe.
Which Games Are Subject to Taxes?
The kinds of betting that are taxed in New Jersey is:
- Slots and video poker
- Poker (cash tables and tournaments)
- Blackjack and roulette
- Sports bett͏ing (online and mobile)
- Lottery and scratch-offs
- Bingo and keno
- Esports and fantasy sports
- Horse racing and pari-mutuel betting
No matter if you play for fun or as a pro, you must report all your wins to the IRS and New Jersey Division of Taxation.
Professional Gamblers and Taxes
If your a pro gambler, that is, it’s your main way to earn money, you will be seen as self employment. Which means:
- Filing Schedule C with your Form 1040.
- You need to pay the self-employment charge for Social Security and Medicare.
- Keeping right logs of all betting gains and losses.
Be careful: The IRS looks very close at professional gambler status, and you'll have to demonstrate regularity, intent to make a profit, and record-keeping.
What About Foreign Winnings?
If you've had gambling winnings abroad (such as Las Vegas trip or offshore online casino), you will still need to report it to U.S. authorities. Yet not all offshore online gaming websites are legal in New Jersey — especially if they're not regulated by U.S. authorities. Gaming offshore casinos can put your money at risk and even subject you to tax complications.
When Interest on Winnings Becomes Taxable
If you deposit your casino winnings into a savings account, investment portfolio, or real estate, the profit or interest is subject to taxes. This is how you do it:
- Interest income is reported on Schedule B of your tax return.
- It is on top of the gambling win and must be reported even if the original win was taxable.
- In New Jersey, you report this income on state tax return as well.
Best Practices to Avoid Legal Issues
- Be truthful when reporting your winnings.
- Keep all gambling and payments documented.
- Use legal and licensed New Jersey venues.
- Avoid offshore gambling websites because winnings become difficult to collect or prove in case of a dispute.
Final Thoughts
New Jersey online casino or land-based casino winnings are always taxable. The simplest way to avoid trouble is to inform yourself, document, and play only with authorized providers. If you do get a big win, you might consider hiring a tax consultant to guide you in proper reporting and claimed deductions.