If you were an Illinois resident when the gambling winnings were earned, you must pay Illinois Income Tax on the gambling winnings. However, you may include the gambling winnings in the non-Illinois portion of Schedule CR, Credit for Tax Paid to Other States. If gambling is your actual profession, then your gambling income is generally considered regular earned income and is taxed at your normal effective income tax rate. As a self-employed individual, you will need to report your income and expenses on Schedule C, which the eFile app will automatically generate and add to your 2020 Tax Return based on the information you enter. Illinois state taxes for gambling winnings. The state of Illinois considers all gambling winnings to be personal income. Again, how much you will owe depends on how much income you collected from all sources during the year. Currently, Illinois has a flat tax rate of 4.95% for all residents. Winnings from gambling can be taxable and should be reported on your tax return. Winnings may be reported on a W2-G. However, if you itemize deductions on the schedule A, then you may deduct gambling losses only up to the amount of the winnings claimed on your tax return. Remember to keep proof of your losses. Lottery winnings are considered ordinary taxable income for both federal and state tax purposes. Winnings are taxed the same as wages or salaries are, and the total amount the winner receives must be reported on their tax return each year. Before the winner receives any of the money, however, the IRS automatically takes 24% of the winnings. If your winnings are reported on a Form W-2G, federal taxes are withheld at a flat rate of 24%. If you didn’t give the payer your tax ID number, the withholding rate is also 24%. Withholding is required when the winnings, minus the bet, are: State Tax On Gambling Winnings More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament Any winnings subject to a federal income-tax withholding requirement If your winnings are reported on a Form W-2G, federal taxes are withheld at a flat rate of 24%. Illinois lottery winnings each time a single payment is over $1,000 for both Illinois residents and nonresidents, and other gambling winnings paid to an Illinois resident if the winnings are subject to federal income tax withholding requirements. Gambling Winnings Tax Rate Illinois 1/20/2020 The federal income tax withholding from your payout is generally a 25 percent rate, but it could at the backup-withholding rate of 28 percent if a gambler refuses to provide the payer like a Nevada casino with their federal identification number. The tax rate deductible from your winnings is still the same irrespective of the amount you win. So it doesn't matter if you earn $2,000 or $400,000 because betting taxes are not progressive. In some cases, the tax ( 25% ) is already deducted by the casino before you are paid your winning.
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