If you ever win money gambling in Missouri, you are obligated to pay both state and federal income taxes on your winnings. This applies if, for instance, you win money at one of the state’s casinos or by playing the Missouri Lottery.
As such, if you do happen to win anything when participating in legal gambling in Missouri, you’ll want to know your obligation when it comes time to pay your taxes. Here we’ve compiled all the relevant info, including information about the requirements gambling providers follow as well as what you have to do whenever you win while gambling in the Show-Me State.
How much does Missouri tax gambling winnings?
Like most states, Missouri considers gambling winnings taxable income. That means when Missouri residents pay their state income taxes, they need to be aware they should report gambling winnings right along with any other income they’ve earned throughout the year.
Missouri residents who make $8,704 or more in a year pay 5.4% state income tax. That’s the highest state income tax bracket, with anyone making less than that paying a smaller percentage according to a graduated scale. Missourians can take standard deductions that reduce their taxable income, too, which can push some back down into the lower brackets.
Since your gambling winnings are the same as any other income in Missouri, they contribute to the overall total of your taxable income and are taxed at the same rate. If someone makes $60,000 a year and wins another $2,000 gambling, that person’s taxable income would be $62,000 minus any potential deductions. That would put you in the 5.4% state income tax bracket.
That is your state income tax obligation, but you have to pay federal income tax on gambling winnings, as well. It works the same way there, with your gambling winnings increasing your overall taxable income, which then places you in a certain income tax bracket. Those brackets range from 10% to 37%. To use the same example, the person who made $60,000 plus another $2,000 from gambling would be in the 22% federal income tax bracket.
Bottom line: The amount you pay in tax on gambling winnings in Missouri (and elsewhere) is directly related to the amount you pay for income tax, generally speaking.
Automatic withholding of tax from gambling winnings in Missouri
Another thing to keep in mind is that if you ever win at least $600.01 while playing the Missouri Lottery, it will withhold 4% of your winnings. For example, say you win $1,000 in a Missouri Lottery game. The lottery will keep 4% of that total before paying you and also report your win to the Missouri Department of Revenue.
In Missouri casinos, if you win a prize of $1,200 or more playing slots or table games, the casino will likewise withhold 4% from your winnings for state income tax and similarly report the win to the state.
Meanwhile, if you win more than $5,000 playing either the lottery or while gambling in a Missouri casino, the provider will additionally withhold 24% of your winnings for federal income taxes. If that happens, the provider will also inform the Internal Revenue Service about the win.
Regarding these automatic withholdings, there are two points to keep in mind. One is that the amount the provider withholds might be more or less than what you actually end up owing.
The other point is that it doesn’t matter, really, whether the casino or gambling provider withholds money for taxes or not, you’re still obligated to pay income tax on your gambling winnings. Some mistakenly think that if the provider doesn’t inform the Missouri Department of Revenue or the Internal Revenue Service of your win, you don’t have to pay taxes on your winnings. That’s not true. You’re still obligated to pay taxes on your gambling “income.”
Paying Missouri state tax on gambling winnings
In order to fulfill your state income tax obligation on gambling winnings, you’ll want to be sure to report your winnings correctly.
How do I report my gambling winnings to the state of Missouri?
When you fill out your Missouri state tax return (e.g., Form MO-1040), the first line asks you to provide your federal adjusted gross income as reported on your federal return. We’ll discuss below how that figure should include your gambling winnings, which as you remember count toward your taxable income.
Since that’s where you begin to calculate your Missouri state taxable income, your state return should therefore already reflect your gambling winnings. As long as your federal adjusted gross income is correct (and includes gambling winnings), you should be starting out on the right track with regard to reporting your gambling winnings on your state income tax return.
Later on the Missouri tax form you’ll find a line where you enter any tax withheld already such as described above. Whenever a provider withholds taxes from your winnings, you should receive a Form W-2G or Form 1099-MISC reflecting the withholding. The money you list as withheld on these forms then goes on your Missouri state income tax form (e.g., Line 35 on Form MO-1040), and you’ll attach the forms to submit along with your return. That tax withheld gets subtracted from your taxable income, thereby reducing your overall state tax obligation.
You definitely want to report any withholdings from your gambling winnings when you file your taxes, because you want to be sure to get credit for having already paid those taxes (and not get taxed on them a second time).
Paying federal tax on gambling winnings in Missouri
Since gambling winnings increase your taxable income, if you win a lot, you could be bumped up into a higher tax bracket, which in turn means you’ll pay a higher percentage of federal income tax on your winnings.
When it comes to federal income tax, the lowest tax bracket is 10% and the highest is 37%. The bracket in which you land depends on how you file (e.g., single, married and filing jointly, or married and filing separately). When it comes to individuals, those making around $10,000 or less fall into the lowest bracket, while those who make $500,000 or more are in the highest.
When you fill out your federal income tax return (Form 1040), you’ll have a chance to include your gambling winnings as you calculate your total taxable income.
What to do with IRS Form W-2G
You will sometimes receive an IRS Form W-2G after a gambling win. The form lists how much you’ve won and how much federal income tax the provider withheld. Sometimes there will be no withholding, while other times (as above) it will be 24%.
Usually you have to win a certain amount in order to get a Form W-2G. Just FYI, here are the standard thresholds:
- $1,200 and higher for bingo or slots (not reduced by the amount of your wager).
- $1,500 and higher for keno (reduced by the wager).
- $5,000 and higher for poker (reduced by the wager or tournament buy-in).
- $600 and higher (or at least 300 times your wager) for other types of gambling.
You’ll find these games in Missouri casinos, which is a common place to receive Form W-2Gs. As we mentioned already, you might get a Form W-2G from the Missouri Lottery for a big win, such as when you win more than $5,000 (and the lottery withholds 24% for the IRS).
If you get a Form W-2G, hang onto it, as you’ll need it when filling out your federal income tax return.
How to transfer information from your W-2G to your federal income tax return
Your personal information appears on the left side of IRS Form W-2G. Over on the right are numbered boxes, some of which will contain figures. Just a couple of these figures will matter to you
You’ll see Box 1 is “Reportable winnings,” which is the amount of money you won. Meanwhile, Box 4 shows “Federal income tax withheld,” which might be zero or might be the withholding amount.
On Form 1040, Line 8 is where you enter “Other income.” That’s where you’ll enter the total from Box 1 of Form W-2G. If you have multiple Form W-2Gs, you’ll want to add up all of your winnings before entering. Also, if you’ve earned other varieties of miscellaneous income, you might want to obtain and fill out a Form 1040, Schedule 1 sheet to help you calculate your overall other income.
If you’ve had any money withheld from your winnings listed in Box 4 of Form W-2G, enter that number on Line 25c of Form 1040, which reports “Federal income tax withheld from.” If you have multiple Form W-2Gs, you’ll again want to add up the numbers from Box 4 on all of them before entering the total on Form 1040.
Of course, if you use tax preparation software, you can just follow the instructions telling you when and where to enter those numbers from the Form W-2Gs as you go, and the program will handle the rest.
Do I have to pay tax on Missouri Lottery winnings?
Yes, if you ever win money playing the Missouri Lottery (or via any other type of legal gambling in the state), that money is taxable income and is subject to federal and state income taxes.
In some cases, if you win more than a certain amount, the Missouri Lottery will withhold tax from your winnings and report your win to the IRS and Missouri Department of Revenue. Some mistakenly think you only owe taxes on lottery winnings if this occurs, but in truth any winnings oblige you to pay taxes, regardless of whether the gambling provider has withheld anything and/or reported your win.
If you play the lottery frequently, you might make a habit of keeping track of your wins so as to be able to report them accurately.
To be honest, if you fail to report a tiny lottery win of a few bucks or even a couple of hundred dollars, the IRS probably isn’t going to come after you. But you are still legally required to report all of your gambling winnings, no matter how small. Reporting a small amount in gambling winnings isn’t likely to affect the amount of tax you pay very much, and is certainly negligible compared to the costs associated with potential penalties for underreporting your income.
When does the Missouri Lottery automatically withhold taxes from your winnings?
The Missouri Lottery will withhold 4% state income tax on prizes of $600.01 or more and 24% federal income tax on wins greater than $5,000. As we said above, winners might get a refund later if that tax obligation exceeds what they actually owe on their lottery winnings, or have to pay more if they turn out to owe a higher percentage of state and/or federal income tax.
We’ll point it out again as well that whether the Missouri Lottery withholds any money from taxes or not, all lottery winnings are subject to federal and state taxes.
Missouri gambling taxes FAQ
If I fail to report gambling winnings to the state of Missouri or to the IRS, what is the penalty?
Failing to report gambling winnings on your state or federal income tax returns can result in a variety of penalties. These could potentially include having to pay additional taxes, having to pay fines and/or having to pay interest on tax owed. If you fail to report gambling winnings, the chance that the IRS will audit your federal return increases, as well.
If gambling providers (casinos, the Missouri Lottery, etc.) notify the Missouri Department of Revenue or the IRS of your gambling winnings and you do not include those winnings in your reported income, that will raise a red flag, as well.
Do I have to pay taxes on gambling winnings of non-cash prizes?
Non-cash prizes won via legal gambling are subject to state and federal taxes just the same as cash winnings. These might include prizes from a raffle or some other similar context. For such winnings, you should estimate the fair market value of the item and report that amount just as you would any other gambling winnings.
As a Missouri resident, do I have to pay taxes on gambling winnings from a different state?
Generally speaking, most states are like Missouri in the way they consider gambling winnings as taxable income. For the most part, if you are a Missouri resident and you win money from gambling in another state, you’ll report those winnings on your Missouri state tax return as well as your federal return.
However, in some cases if you win an especially large amount of money in that other state, you might have to file a nonresident return in that state. There are other factors that sometimes come into play, as well, including how much time out of the year you spend in that other state or whether you own property in that state.
Another possibility is that if you win big in another state (more than $5,000, say), that state will withhold state income tax from your winnings. In that case, you’ll want to be sure to report not just your winnings but also the money withheld on your tax returns as described above.
The Missouri Department of Revenue has a useful page that answers questions related to your obligations for income in other states.
What is Form 1099-MISC and how do I use it?
An IRS Form 1099-MISC is a form reflecting miscellaneous income you receive from non-standard sources. Sometimes when you win money gambling, you might get a 1099-MISC showing what you’ve won.
You can treat a Form 1099-MISC much as you would a Form W-2G. Look for Box 3 that lists “Other income” and include that amount when totaling your gambling winnings for the year that you report on your state and federal taxes.
The form also has boxes showing any tax withholdings. Box 4 shows “Federal tax withheld,” and Box 16 shows “State tax withheld.” Be sure to use those figures as well when calculating any withholdings from your gambling winnings.
In Missouri, can I deduct losses when I report my gambling winnings?
Much like in other states, in Missouri you can deduct for gambling losses but only if you forgo taking the standard deduction and itemize all your deductions.
For your federal return, you’ll want to use Form 1040, Schedule 1 to add up both your gambling wins and losses. Note that you can’t just subtract losses from winnings, but you have to calculate both separately. You also can’t deduct more losses than money you’ve won. Be aware as well that when deducting losses, you can only include money that you spent gambling and not associated costs (travel or hotel expenses when going to play a poker tournament, for instance).
You don’t have to be a professional gambler to deduct losses, but frankly, for most people who gamble only casually, it is probably better just to take the standard deduction rather than fuss with itemizing everything. If you’re not sure which way to go, check with a tax preparer.