Vermont Gambling Winnings Tax Calculator: VT Gambling Tax Laws Explained
Before you begin gambling or sports betting in Vermont, it's important you understand the relevant tax laws and how they might apply to you. It's possible you'll owe taxes on gambling in Vermont.
Use this Vermont gambling tax calculator to quickly and easily determine how much you keep from your winnings:
The Vermont gambling winnings tax rate varies depending on the individual's overall taxable income. The state follows a progressive tax system, which means that higher income levels may be subject to higher marginal tax rates. It's important to note that gambling winnings are generally considered taxable income and must be reported accordingly.
Are Gambling Winnings Taxable in Vermont?
Yes. Gambling winnings in Vermont are considered taxable income and are therefore subject to both federal and state income tax. Due to Vermont's progressive tax system, the more you win, the more you may owe in taxes.
The minimum amount withheld from winnings in Vermont is 6% on average. The federal government also requires gambling establishments to withhold federal income taxes from certain types of gambling winnings. The federal rate is typically 24% applied to cumulative winnings greater than $5,000.
Regardless of whether you earn more or less than $5,000, it is important to report all gambling winnings. The reporting method for your winnings will depend on the amount you earn. In certain situations, if you meet specific criteria, the gambling organization will provide you with a Form W-2G, which I dig into later in this article.
If the circumstances for a Form W-2G do not apply to you, you will need to include the cash value or the value of other prizes in the "Other Income" section of your Form 1040 when filing your taxes. I strong recommend keeping accurate records of your gambling activities, including wins and losses, to ensure proper tax reporting.
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What are the Gambling Tax Rates in Vermont?
Gambling winnings are subject to taxation at the individual income tax rate in Vermont, which is based on your overall taxable income and the corresponding tax brackets set by the state. The specific tax rates on gambling winnings can vary depending on income.
| Income | Tax Rate |
|---|---|
| $0 to $42,150 | 3.35% |
| $42,150 to $102,200 | 6.6% |
| $102,200 to $213,150 | 7.6% |
| $213,150+ | 8.75% |
How Does The IRS Know If You Won Money Gambling?
The Internal Revenue Service (IRS) is able to access information regarding your gambling winnings through gambling institutions in the state. Whether you bet on Vermont sports betting apps or the lottery, these institutions report activity to the IRS. This is especially true when players earn significant winnings and a Form W-2G, which reports certain types of gambling winnings to both the recipient and the IRS, is issued.
Additionally, if you receive a substantial payout, the gambling institutions may report the transaction to the IRS as part of their compliance with financial regulations.
It is important to remember that accurately reporting your gambling winnings is your responsibility, regardless of whether the IRS receives direct notification from gambling institutions or other sources. Failing to do so can result in serious consequences.
What Happens If I Don’t Report My Gambling Winnings?
Accurately reporting gambling winnings is critical for individuals engaged in gambling. Violating laws related to federal and Vermont gambling taxes can lead to serious consequences, no matter what the gambling purposes. When a person violates the reporting requirements, they may face penalties and fines imposed by the tax authorities.
In Vermont, for instance, not reporting gambling winnings accurately can result in monetary fines and potential criminal charges. The person violating must comply with the reporting regulations to mitigate further legal ramifications.
Failing to report gambling winnings accurately can also trigger audits or investigations by federal tax authorities, subjecting the individual's financial records to scrutiny. This can result in additional penalties.
It is important for bettors to report their gambling winnings accurately to uphold their financial integrity, comply with tax laws, and avoid legal troubles.
How to Claim & Report Vermont Gambling Winnings for Taxes
State taxes for gambling winnings in Vermont are included in your taxable income. In most cases, all that is required is to add your gambling winnings when calculating your cumulative income for the Form IN-111 Individual Income Tax Return. Since tax rates in Vermont are progressive, the more you earn, the more you will owe.
When it comes to federal taxes, you might receive a W-2G Form. The eligibility criteria for receiving the form in Vermont are as follows:
- ✅ $600 or more from a horse race or sports betting, provided the winnings are at least 300 times the wager amount
- ✅ $1,200 or more from bingo or slot machines
- ✅ $1,500 or more from Keno
- ✅ $5,000 or more from poker
When you receive a Form W-2G, there is no need to fill anything out. Since the gambling institution sends the form both to you and the IRS, it simply serves as a record of your gambling activity. It's important to report your gambling income whether or not you receive a Form W-2G.
To do this, enter the total value of cash and non-cash earnings on your Form 1040. This amount should be entered in the "Other Income" section. If you did receive a Form W-2G, you will transfer certain information to your Form 1040.
What to Do If You Do Not Receive a W-2G Form in Vermont?
If you do not receive a W-2G Form, it most likely means that you did not meet the eligibility criteria listed above that would require the gambling institution to issue one.
If you still believe you should have been issued a W-2G form, you should reach out to the gambling organization as soon as possible to rectify the situation.
Whether you are sports betting in Vermont or playing the lottery, it is important that you keep a detailed record of all of your spending and earnings. Not receiving a form, whether you are eligible or not, doesn't mean your winnings are necessarily tax-free. These records are invaluable when it comes to making sure you receive the correct forms so that your gambling income is correctly reported.
Can I Deduct Gambling Losses in Vermont?
Yes. In Vermont, individuals can deduct gambling losses up to the amount of their total winnings for the tax year, subject to specific guidelines. This deduction applies to direct gambling losses, which include wagers placed and lost. However, it's important to note that expenses such as travel costs or meals related to gambling cannot be deducted as reasonable expenses.
For instance, if your gambling winnings for the year amount to $10,000, you can deduct up to $10,000 in gambling losses. It's essential to maintain accurate records of your gambling activities throughout the year, including details of your losses.
When claiming gambling losses on your Vermont state tax return, ensure that you itemize your deductions. Retain relevant forms, receipts, or other documentation that establish the fair market value and substantiate your losses. You should retain these records for a minimum of five years to comply with Vermont's tax laws.
What If I Lost More Than I Won Gambling?
In Vermont, the tax laws for gambling losses state that if you lose more money than you win, you generally cannot deduct the excess losses on your tax return. This applies to both gambling machines, such as slot machines, as well as losses incurred in other games. The Internal Revenue Service (IRS) considers gambling losses as personal expenses and does not allow them to be offset against gambling winnings for tax purposes.
However, it's important to note that if you do have gambling winnings, you are required to report them as taxable income, even if your overall gambling activity results in a net loss. Keep accurate records of your gambling activities, including both wins and losses, to support your tax reporting.
Vermont Lottery Taxes
In Vermont, lottery winnings are taxed much in the same way as other forms of gambling. Any earnings from a lottery ticket are subject to both state and federal taxes. When individuals win prizes from the Vermont lottery, the winnings are considered taxable income by the IRS and must be reported on their tax returns.
The Vermont Department of Taxes requires individuals to report their lottery winnings, regardless of the amount, on the appropriate tax forms. The same goes for reporting winnings on your federal, which should be reported using Form 1040.
You may also receive a W-2G federal tax forms if you win $600 or more from lotteries over the course of the year. Remember to keep a close record of all your gambling winnings so you can fulfill tax obligations under both state and federal tax laws.
How Are Group Lottery Wins Taxed in Vermont
When a group of individuals wins a lottery prize together, it is considered a group lottery win. In such cases, each participant is responsible for reporting their share of the winnings as taxable income on their individual tax returns. This applies to the portion of the winnings received directly or distributed by the group organizer.
For group lottery wins in Vermont, it is important for all to accurately report their individual shares of the winnings on their tax returns. Other than the fact that the winnings are divided among the group, the rest of the tax reporting remains the same as for other gambling winnings. Effective communication and coordination within the group are key to ensuring proper reporting and compliance with the tax regulations specific to the Vermont lottery.
Taxes on Multi-State Lottery Wins
Multi-state lotteries are lottery games operating across multiple states. Due to a greater number of people participating, multi-state lotteries often offer impressive prizes. You may have heard of some popular multi-state lotteries such as Powerball or MegaMillions.
Vermont gambling winnings taxes apply to multi-state lotteries the same way as any other Vermont lottery. Since multi-state games often return such large prizes, you should definitely expect to receive a W-2G federal tax form. Make sure you have all your documentation in order and keep records in the event you win big on a multi-state lottery.
Vermont Gambling Winnings Tax Calculator FAQ
Author
Stefan Krysa is an expert sport betting writer for BetVermont.com. Born in the U.S. and raised in Canada, he is an avid fan of both American and Canadian sports, and is committed to the best information for Vermont sports bettors.