Casinos in the U.S. have specific IRS reporting obligations when it comes to gambling winnings. The two primary forms involved are Form W-2G (for U.S. persons) and Form 1042-S (for nonresident aliens). Properly managing both is critical for regulatory compliance, audit readiness, and avoiding IRS penalties.
1. Form W-2G – For U.S. Citizens and Resident Aliens
When to Issue:
Casinos must issue Form W-2G when a U.S. person wins at or above certain thresholds:
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$1,200 or more from slot machines or bingo
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$1,500 or more (net of buy-in) from keno
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$5,000 or more (net of wager) from poker tournaments
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Other gambling winnings (e.g., lotteries, raffles) if the payout is $600 or more and at least 300 times the wager
Withholding Requirements:
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24% backup withholding if the winner doesn’t provide a valid SSN
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Otherwise, no withholding for U.S. citizens and resident aliens (unless backup withholding is triggered)
What’s on the Form:
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Winner’s name, address, SSN
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Type of wager and amount won
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Date of the win
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Federal income tax withheld (if any)
2. Form 1042-S – For Nonresident Aliens
When to Issue:
Casinos must use Form 1042-S for gambling winnings paid to nonresident aliens, including international tourists and players. All U.S.-source gambling winnings are taxable unless covered by a tax treaty.
Withholding Requirements:
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30% flat withholding on gross winnings, unless:
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A tax treaty applies (some reduce or eliminate withholding)
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The winnings are from certain exempt games like blackjack or baccarat (which are classified as games of skill)
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TIN Requirements:
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A valid ITIN (Individual Taxpayer Identification Number) is required for any treaty benefits to apply
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Without an ITIN, the full 30% is withheld
What’s on the Form:
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Winner’s name, country of residence, and ITIN (if available)
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Type of income (code 28 = gambling winnings)
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Gross winnings and federal tax withheld
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Withholding agent’s information (the casino)
