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West Virginia Sports Betting Apps Taxes
West Virginia is one of the few states with legal online casinos. After passing legislation to legalize online casino gaming in 2019, the first West Virginia casino sites were launched in the summer of 2020. West Virginians can also use online sports betting and play daily fantasy sports. In fact, the online lottery is the only type of online gambling that is not currently permitted in the Mountain State.
The West Virginia online gambling industry may be young, but it offers some great options to gamblers in the state. West Virginia passed legislation legalizing sports betting in March 2018. Following the Supreme Court’s overturning of PASPA, the law became active. The first sports bet in West Virginia was taken in August 2018, and by 2019, online sports betting was launched in the state.
Do I have to pay taxes on my winnings?
The state only taxes winnings gained through the West Virginia State Lottery. Therefore, online casino and betting winnings aren’t subject to WV taxes.
However, people do need to list the following gambling wins on federal tax forms:
- Online slots - Wins of $1,200 or greater
- Online sports betting - Wins of $600+ (without TIN) or $5,000+ (if TIN is provided)
- Online poker tournaments - Wins of $5,000 or greater
Casino gaming winnings from West Virginia are not taxable. Unless winnings were from the West Virginia State Lottery, they are not taxable. Do not file a West Virginia return if this was your only income.
West Virginia source income of a nonresident does not include the following income even if it was included in your federal adjusted gross income:
- Gambling winnings, other than prizes awarded by the West Virginia State Lottery.
Gambling losses claimed as itemized deductions on the federal income tax return cannot be deducted on the West Virginia tax return. Consequently, there is no provision in the West Virginia Code to offset gambling winnings with gambling losses.
The state taxes West Virginia online gambling revenue at a rate of 15%. West Virginia sports betting revenue is taxed at a rate of 10%.
What are the tax rates on winnings?
Tax rates depend on your annual income and tax bracket. Gambling income is subject to state and federal taxes but not FICA taxes, and the rate will depend on your total taxable income (not just wages) minus deductions (standard or itemized).
Gambling winnings are subject to a 25% withholding for federal tax, though the actual amount you owe on your gambling win will depend on your total income. That tax is automatically withheld on winnings that reach a specific threshold.
The state tax rate in West Virginia is 6.5%, which is the rate your gambling winnings are taxed. These are broken up differently starting with your Marginal tax rate which is the bracket your income falls into. Then you have your Effective tax rate which is the actual percentage you pay after standard deductions, etc., and operate on a sliding scale depending on filing status and total taxable income. The rules state that when gambling, a person's winnings are to be combined with their annual income; which could move them into a higher tax bracket, hence why it’s important to be aware of gambling income before starting tax preparation.
How to pay taxes?
Gambling winnings in the amounts shown on the table below must be reported to the IRS on Form W2G, Certain Gambling Winnings, which must be completed by the gambling operator before the prize is awarded. For the operator to complete the W-2G form, the prize winner must provide a name, address, and social security number, or taxpayer identification number (TIN).
- In addition, the prize winner must provide verification of this information in the form of a driver’s license, social security card, voter registration card or other proper identification.
- If the winner does not provide proper verification, the payor is required to issue the W-2G form without the social security number and withhold the tax before awarding the prize.
- If the prize winner provides the necessary information and proper verification for issuance of the W-2G form, backup withholding is not required.
Backup withholding applies to all gambling winnings if: The winner of reportable winnings does not furnish his or her name, address and social security number AND proper verification of that information; and, Regular withholding has not been applied; and, The winnings are: o at least $600 and at least 300 times the wager, or o at least $1,200 from bingo or slot machines, or o $1,500 from Keno, or o more than $5,000 from a poker tournament.
To calculate winnings, prize amounts are reduced by the amount of the wager. Non-cash prizes, such as automobiles, are subject to withholding and are calculated on the basis of the fair market value of the prize.
If the winner pays the withholding, the 24% federal withholding rate applies. If the payor pays the withholding, a special federal withholding rate of 31.58% applies. Prizes awarded by the West Virginia Lottery Commission are considered West Virginia sourced income, including prizes won by nonresidents.