This content was produced in partnership with The information in this article is not intended to be personal financial advice.

As the landscape of the gambling industry continues to evolve in Illinois, one constant remains - the obligation to pay taxes on gambling winnings. Understanding the intricacies of Illinois gambling tax regulations is essential for residents and visitors who have ventured into the world of casinos and online gambling within the state.

Subsequently, identifying the optimal platform can be challenging; for example, to approach this discerningly, slots enthusiasts typically contrast options at and other reputable comparison sites offering a comprehensive overview. To assist those in the Midwest, this article offers a primer.

Online Casinos in Illinois

With the advent of online gambling and sports betting, Illinois has introduced new tax rules; however, it has maintained a relatively straightforward approach. Online gambling winnings are subject to the same tax rate as other forms of gambling in the state, currently 4.95%. Illinois boasts a selection of legal online casinos and sportsbooks, featuring well-known brands like DraftKings, FanDuel, BetRivers and Caesars.

State-regulated platforms typically provide the necessary tax forms, such as Form W-2G or 1099-MISC (depending on winnings). For individuals exploring alternative online real money casinos, these platforms do not issue Form W-2G or 1099-MISC; in such cases, it becomes the responsibility of the gambler to accurately self-report winnings to the government.

Mandatory Taxation

In the US, the Internal Revenue Service (IRS) mandates the payment of taxes on gambling winnings - irrespective of whether the gambling is recreational or otherwise. As per IRS regulations, gambling establishments are required to issue a Form W-2G for winnings exceeding $600; in cases where substantial winnings surpass $5,000, the establishment may withhold 24% of federal income tax.

However, the issuance of a Form W-2G is not solely contingent on the amount won - the threshold varies depending on the specific type of gambling. For instance, those partaking in slots at the online casinos mentioned above would receive a Form W-2G for winnings of $1,200 or more. For other gambling activities, the thresholds are as follows:

  • Keno: A Form W-2G is issued for winnings of $1,500 or more.
  • Poker tournaments: The threshold for a Form W-2G is set at $5,000.

Even in the absence of a Form W-2G, the IRS mandates the reporting of all gambling winnings regardless of their amount; reporting these winnings involves the completion of Form 1040 or Form 1040-SR (and in some instances a 1099-MISC).

Illinois Gambling Taxes

Illinois treats gambling winnings as personal income; therefore, the state's standard tax rate is applied to these winnings. They must be reported on Form IL-1040 - the state's Individual Income Tax Return. For the year 2022, Illinois maintains a flat tax rate of 4.95%; this rate aligns with the state's Individual Income Tax rate, establishing a straightforward and uniform tax structure for all residents. To report gambling income, Illinois residents use Schedule M, aiding taxpayers in calculating the total additions necessary for inclusion on Form IL-1040. Additionally, Schedule IL-WIT should be completed if any winnings were withheld.

However, Illinois does not permit deductions for gambling losses for tax purposes - this means gambling losses cannot be used to reduce an individual's tax liability in the state. However, it is still possible to itemize deductions on a federal return using Schedule A (Form 1040). Importantly, the total amount of gambling loss deductions cannot exceed the total amount of gambling winnings.

Tax Credit for Out-of-State Gambling Winnings

Illinois extends a tax credit to individuals who win significant amounts outside the state - for full-time residents of Illinois with substantial winnings from other states it is possible to claim a tax credit using Schedule CR. This credit serves to offset tax liability in Illinois for the applicable tax year.

Ultimately, a firm grasp of the nuances of Illinois gambling taxes is indispensable for both residents and visitors. Although the state's flat tax rate simplifies matters, remaining informed about tax thresholds, deductions and credits is vital for navigating gambling taxation with confidence and compliance.

This content was produced in partnership with The information in this article is not intended to be personal financial advice. If you or anyone you know has a gambling problem, call 1-800-GAMBLER.

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