Massachusetts Gambling Winnings Tax Calculator 2024: How Will You Be Taxed?
Massachusetts sports betting is now legal, and it's important to understand you may have to pay taxes if you win a certain amount of money.
In Massachusetts, gambling is defined as winning $5 or more by placing a bet "or gaming on sides or hands of those gaming." If you win money from any form of gambling, you are expected to pay a Massachusetts gambling tax, although some lower amounts are unnecessary.
All gamblers should consider tax obligations that may come after claiming Massachusetts sportsbook promos, as well as taxes that may come from casino and lottery wins. We’re going to answer some specific Massachusetts gambling tax questions, as well as some questions on federal taxes.
How to Calculate Your Massachusetts Gambling Taxes
Massachusetts taxes ordinary income at 5%. This means there is not a set gambling tax rate in MA. It will be treated differently than your income, but the rate will depend on your overall taxable income.
You should keep any documentation you receive from a sportsbook, especially pertaining to a loss. You can declare gambling losses on state taxes and possibly federal U.S. taxes. Even if you claim a promotion like the BetMGM Massachusetts bonus code and end up winning money, it's important to keep in mind taxes will likely be required.
Are My Gambling Winnings Taxed in Massachuestts?
Reporting gambling winnings is the responsibility of every Massachusetts resident, however small the wins. You will be required to pay taxes on gambling winnings with sports betting apps, sites and retail sportsbooks in Massachusetts. This includes federal and state taxes.
If you win under $5000, there is no withholding, but it's still potentially subject to taxes. If you win above $5000, the casino or sportsbook must withhold 24% and is obligated to issue you Form W-2G, which will document their withholdings. If you’re lucky enough to win greater than $5000, you will have to provide the casino with your SSN or Tax ID number, plus two forms of ID, and they will issue you the Form.
What are the Tax Rates for Gambling in Massachusetts?
Massachusetts taxes gambling income at 5%, the same rate they tax all ordinary income. Whether you bet at Caesars Sportsbook Massachusetts or any other sportsbook, this is a tax on your total gambling winnings, not on any particular win. And it's important to note that this is on top of Federal taxes on gambling winnings. Those are classified as “other” income but effectively taxed at the same rate as the taxes on your “regular” income.
How to Claim and Report Massachusetts Gambling Winnings for Taxes
A Massachusetts taxpayer can claim and report gambling wins for taxes in Massachusetts by filling out Schedule X on the state income tax form. That includes winnings from online sportsbooks, in-person sportsbooks, state casinos or horse racing. Specifically, you fill out Line 3, “Other gambling winnings (sources other than Massachusetts state lottery)”. Once you have the amount, you also add it to Line 9 on your state of Massachusetts tax return.
You are also responsible for federal taxes on gambling winnings in Massachusetts. To do that, fill out Schedule 1 for “Additional Income and Adjustments to Income”. Enter your gambling income on Line 8b. You can also enter any deductions associated with gambling income including gambling losses up to the amount of your gambling winnings.
Every Massachusetts taxpayer must report non-cash gambling winnings as well. It is treated as Massachusetts gross income equal to the fair market value of the win. Taking down that $100,000 Ferrari is great but it comes with outstanding tax liabilities. The gambling establishment will provide you with form 1099-MISC. If they don’t, you are responsible to fill one out yourself.
Will I Be Taxed on Massachusetts Betting Promotions?
You will not be taxed on receiving or claiming promos from Massachusetts sports betting apps or online sites. If you win money from the promotional bonuses, however, the winnings will be taxed.
What if I Have Not Received a W-2G Form in Massachusetts?
Every gaming operator, such as FanDuel Massachusetts is obligated to issue you a Form W-2G if you win $5000 or greater. If for some reason you don’t get the form, contact the casino as they should have a copy. If that fails for some reason, contact the IRS itself as they too should have a copy. Not having the form does not relieve you of the income tax liability, so just report the company using the above process.
Are Gambling Losses Deductable in Massachusetts?
Yes, you can deduct gambling losses in Massachusetts on both your Federal and State tax returns. But state and federal rules only let you deduct up to the number of your gambling winnings. So in other words you can’t use gambling losses to offset federal gross income. They can only offset gambling income.
Massachusetts Lottery Taxes
Lottery winnings are taxable in Massachusetts in a similar manner to how casino and sports betting winnings are taxed. On the Federal level, lottery wins are taxed at the same rate as regular income and are entered on Schedule 1 as you do with gambling win. As for the state, winnings are entered on Line 8b and are also taxed at the same 5% rate as on regular income.
How Does Massachusetts Tax Group Lottery Wins?
So what happens when everyone in the office goes pool a bunch of lottery tickets and one of them hits big enough to incur taxes? If this happens, one person in the group is designated the “winner” and must fill out Form 5754 and submit it to the casino. There the designated “winner” submits the tax ID’s and prize shares of each member of the group. Everyone will then receive and file Form w-2G.
After all that, you submit your taxes as you would if it was an individual lottery win, and pay at the regular Federal and State of Massachusetts rates.
Taxes on Multi-State Lottery Wins
Out-of-state lottery winnings count towards federal gross income. They are still entered on Schedule 1 on your federal taxes. On your state taxes, it goes into your Massachusetts gross income on Line 8b on your return.
The tax rates are the same as rates on ordinary federal gross income whether the gambling winnings were from in-state or out. For in-state, that’s 5% and for federal taxes, that’s just whatever your effective rate is on that marginal income.
What Happens If I Don't Report My Gambling Winnings?
It's important to state that any Massachusetts resident receiving gambling winnings should report it, same as you would report all taxable income. This holds true even if this includes a non-cash prize from DraftKings Massachusetts or other sportsbooks. Not only is this in your financial interest, but it can prevent you from unnecessary fines and fees. The gaming establishment has already withheld some of your winnings, so reporting it properly sets you up for a refund or effective credit vs other gross income. You don't want to be paying taxes that you have already taken care of.
If you don’t report, you may get hit with higher withholding levels on the Federal level. Federal withholding rules stipulate that the rate may go up from 24-25% to 28%.
Massachusetts Gambling Tax Calculator FAQ
Yes, sports betting is now legal in Massachusetts. You can place bets at various sportsbooks located throughout the Commonwealth, including in-person bets at state casinos, and eventually, racetracks. Online betting is the latest wagering option available in Massachusetts, going live on March 10.
Yes, you are expected to report your Massachusetts gambling winnings when you file your taxes. If you win while betting on sports, horse races or dog races, or while playing at casinos or with the state lottery, you should expect to pay gambling taxes in Massachusetts.
Author
Adam Warner is a former financial writer for Schaeffers Research, but now has added the gambling industry to his overall expertise. Adam was a Market Maker on the American Stock Exchange and a graduate of Johns Hopkins University.
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