Gambling and Sports Betting Tax Calculator (Maryland) 2025

Last Updated on August 20, 2025 by Martin Green

Maryland Gambling and Lottery Tax Calculator:

Estimate your Maryland sports betting taxes for online or retail bets. Enter winnings and losses; we apply Maryland’s current platform-specific rates (educational only).

Quick links: Best Maryland Sports Betting Apps · Tax Calculators by State

Winning money from the lottery, casinos, or sports betting in Maryland is thrilling, but the IRS and the state both count those winnings as taxable income. You have to pay federal and Maryland state taxes on gambling and lottery winnings, regardless of the amount. So even that $10 scratch-off win or a life-changing jackpot comes with tax strings attached.

Maryland grabs a chunk of bigger payouts right away, and the feds want their cut too. The tax rate depends on how much you win, if you live in Maryland, and sometimes your local county rate. If you know the rules, you can sidestep nasty surprises when you collect winnings or file your tax return. For more information on Maryland tax rates and rules, check the Comptroller of Maryland website.

It helps to understand how much gets withheld, which forms you’ll need, and what to do if you win in a group or lose paperwork. This guide covers the basics, tax rates, and how to report your winnings without tripping up.

Key Takeaways

• All gambling and lottery winnings are taxable at both state and federal levels
• Maryland applies specific withholding rates and local taxes might stack on top
• You need to report winnings using the right forms and pay attention to deadlines

How Maryland Taxes Gambling & Lottery Winnings: The Basics

Maryland treats gambling and lottery winnings as taxable income at both the state and federal level. You have to report all winnings, no matter the amount. The rules change a bit depending on where you live, how much you win, and if taxes got withheld before you file.

What Counts as Gambling Income in Maryland? (Sportsbooks, Casinos, DFS, Raffles)

Any money you win from gambling is taxable income. That includes lottery jackpots, casino payouts, online sports betting, daily fantasy sports (DFS), raffles, and even those little scratch-off prizes.

Maryland lumps gambling income in with all your other taxable income. You need to report every win on your tax return. Whether it’s $20 from a raffle or $20,000 from a sportsbook, you can’t skip it.

Types of gambling income include:

• Lottery and scratch-off tickets
• Casino games (slots, table games, poker tournaments)
• Sports betting and online sportsbooks
• Daily fantasy sports contests
• Raffles, bingo, and keno

Non-cash prizes like a car or vacation? The government taxes those too, at their fair market value. You’ve got to include those amounts when you file.

Federal vs. Maryland Treatment: What’s Taxed Where

At the federal level, all gambling winnings count as taxable income. You report them on your federal return using Form 1040. If your winnings hit certain thresholds, the payer gives you a Form W-2G and might withhold federal tax. You can find more reporting info on the IRS website.

Maryland taxes gambling winnings too. The state uses a graduated income tax rate from 2% to 5.75%, plus local county tax rates between 2.25% and 3.2%. These local rates stack on top of the state rate.

If you win over $500 and no state tax was withheld, Maryland expects you to file estimated taxes. Both the IRS and the state want their share, so you’ll likely owe taxes to both on the same winnings.

Residents vs. Nonresidents: Which Winnings Are Taxable

If you live in Maryland, you have to pay state tax on all gambling winnings, even if you won out of state. Out-of-state casinos, online sportsbooks, or another state’s lottery – it doesn’t matter.

Nonresidents who win in Maryland, like a Virginia resident hitting a jackpot at a Maryland casino, have to file a Maryland nonresident return and pay state and local tax on those winnings.

Your residency just changes which state you file in, not whether your winnings are taxable. Sometimes, you’ll need to file in your home state too and claim a credit for taxes already paid to Maryland. For more on nonresident tax filings, visit the Maryland Nonresident Information page.

Withholding vs. Estimated Tax: When Each Applies

Casinos, sportsbooks, and lottery operators might withhold taxes if your winnings are large enough. For federal tax, they usually withhold when you win over $5,000 from a single bet or tournament. The federal withholding rate is 24%.

Maryland requires withholding at 8.75% for winnings over $5,000. Smaller amounts don’t get automatic withholding, but you’re still on the hook for the tax.

If you win more than $500 and no state tax was withheld, you need to file Form 502D to pay estimated tax. This helps you avoid underpayment penalties. You can find Form 502D and instructions on the Maryland Tax Forms page.

Withholding happens automatically for big wins, but you’re responsible for estimated tax if there was no withholding. Both are just ways to make sure you pay up before your annual tax return is due.

Are Gambling Winnings Taxable in Maryland? State & Federal Rules

Gambling winnings count as taxable income for both the state and the IRS. Lottery wins, casino games, sports betting, horse racing – you’re supposed to report and pay tax, and you might see automatic withholding if your prize is big enough.

Does Maryland Tax Gambling Winnings?

Yep, Maryland taxes all gambling winnings, whether they come from the state lottery, casinos, sports betting, or any other game of chance. You have to include these on your Maryland income tax return.

If your prize is over $5,000, the state takes a chunk automatically. Residents see about 9.25% withheld, while nonresidents get hit for around 8.75%. That’s on top of the federal 24% withholding for big wins.

Even smaller prizes that don’t trigger withholding are still taxable. Keep track of your wins and losses and report them when you file. That way, you avoid hassles and penalties for underreporting.

Is There a Separate Gambling Winnings Tax in Maryland?

Maryland doesn’t have a special gambling winnings tax. Your winnings just get added to your other taxable income for the year.

The state uses a graduated tax rate from 2% up to about 5.75%. Local counties can tack on more, which bumps up your effective rate.

So, gambling winnings are taxed like wages or business income. Withholding rules for gambling are stricter, though, since casinos and lottery operators report winnings directly to the state.

When Do W-2G/1099 Forms Get Issued for Maryland Players?

Casinos, sportsbooks, and the Maryland Lottery issue a Form W-2G when your winnings hit federal reporting thresholds. Slot machine wins of $1,200 or more, and lottery prizes of $600 or more, usually trigger a form.

If you win through other platforms, like online sportsbooks, you might get a Form 1099-MISC or 1099-K depending on how they pay you. These forms go to the IRS and the state, so you can’t just ignore them.

Even if you never get a form, you’re still supposed to report all gambling winnings as income. Keeping your own records of bets, wins, and losses makes tax time a bit less painful. For more on reporting, check the IRS W-2G Info and Maryland Tax Forms pages.

Are Crypto Payouts or Promo Credits Taxable in Maryland?

Yes. If you get gambling winnings in cryptocurrency, both the IRS and Maryland count it as taxable income. You need to report the fair market value of the crypto when you receive it. If you later sell or trade it, you could have capital gains or losses too.

Promo credits, free bets, or bonuses aren’t taxable until you use them and win real money. Once you cash out, those winnings become taxable like any other prize.

These rules don’t change whether you’re gambling at a casino or on a licensed casino gaming platform. Always keep track of digital payouts and promo wins so you don’t make a mistake at tax time.

Maryland Gambling Tax Rates & Withholding Percentages

Gambling winnings in Maryland are taxable by the state and IRS. You might also pay local surtaxes depending on your county, and withholding kicks in on bigger wins. How you get paid can change your tax bill.

State Income Tax Rate(s) Applied to Gambling Wins in Maryland

Maryland doesn’t have a separate gambling tax. You add your winnings to your total taxable income. The state’s graduated income tax system starts at 2% and goes up to 5.75%.

If your gambling income bumps you into a higher bracket, you pay the higher rate only on the income above that threshold. For example, if you already earn $60,000 and win $10,000 from the lottery, your taxable income is $70,000, and part of that could be taxed at a higher rate.

Since Maryland treats gambling winnings like wages, you can’t dodge state income tax by saying it’s a “one-time” thing. You’ve got to report it all.

Local/City Surtaxes (If Any) That May Apply in Maryland

Maryland also charges a local income tax based on where you live. These surtaxes go from 2.25% in Worcester County to 3.2% in counties like Montgomery, Howard, and Prince George’s.

This local tax covers your total taxable income, including gambling winnings. So if you live in a 3.2% county and win $5,000, you owe $160 in local tax on top of state and federal taxes.

Since these rates vary, a gambling tax calculator (or even a quick check on the Maryland Local Tax Rates page) can help you estimate what you’ll owe.

Federal and State Withholding Thresholds & Percentages

Casinos, sportsbooks, and the Maryland Lottery have to withhold taxes if your winnings are big enough. The IRS wants 24% withheld if you win:

• $1,200 or more from slots or bingo
• $1,500 or more from keno
• $5,000 or more from poker tournaments
• $600 or more on other bets if the payout is at least 300 times your wager

Maryland requires withholding if you win over $5,000. The rate is 8.75% for residents and 7% for non-residents.

Just remember, withholding is only a prepayment – it’s not always the final bill. You might owe more or get some back when you file your return.

Lump Sum vs. Annuity: How Your Choice Can Affect Taxes

If you win a big lottery prize, you usually have to pick between a lump sum or an annuity. A lump sum means you get all the money at once, and the whole thing is taxable that year, which could bump you into the highest brackets for both state and federal taxes.

An annuity pays you over several years. Each payment is taxed as income for that year, which might keep you in a lower bracket. Still, you could pay a lot in taxes over time.

Honestly, it’s worth running both options through a lottery winnings tax calculator or checking with a tax pro before you decide. You want to know what you’re really taking home after taxes.

Sample Calculations: Small Win, Big Win, Jackpot (Use Calculator)

Let’s break down how taxes hit different types of gambling wins in Maryland.

• Small win ($500 scratch-off): You need to report this as income. There’s no automatic withholding, but you still owe state, local, and federal taxes when you file.
• Big win ($10,000 sports bet): The IRS grabs 24% right away, and Maryland usually withholds 8.75% if your payout’s above $5,000. Your county’s local surtax piles on too.
• Jackpot ($1 million lottery prize, lump sum): Maryland hits you with the top state rate of 5.75%, plus your county surtax, and the IRS withholds 24%. When you actually file, your federal bill could climb higher.

A gambling winnings tax calculator can give you a ballpark of your take-home in each situation. It’ll show what’s withheld upfront and what you might still owe come tax time.

How to Report Maryland Gambling Winnings on Your Taxes (Forms & Deadlines)

No matter how much you win, you have to report all gambling winnings. Federal and Maryland rules make you use certain forms, meet deadlines, and keep good records. Otherwise, you risk penalties. It’s not fun, but that’s the deal.

Which Forms You’ll Use: W-2G, 1099-MISC, 1040, Schedule 1, Schedule A

Casinos, lotteries, and other payers hand out Form W-2G if your winnings hit certain triggers. For instance, a slot or bingo win over $1,200, or a poker tournament prize above $5,000, means you get a W-2G. This form lists your winnings and any taxes withheld.

Sometimes, smaller or promo prizes come with a Form 1099-MISC instead. Even if you get no form, you still have to report the income. No exceptions.

On your federal return, you put winnings on Form 1040, Schedule 1 (Additional Income). If you itemize, you can list gambling losses on Schedule A, but only up to the amount you won.

Hang onto every form you get. They prove your income and any taxes already taken out.

Where to Enter Winnings on Your Maryland State Return

If you live in Maryland, report all gambling winnings on Form 502 (Resident Income Tax Return). You include the full amount in your Maryland adjusted gross income – even if you won it out of state. Maryland’s tax site has more on state income tax forms and rules.

Nonresidents with Maryland winnings file Form 505 (Nonresident Return). Maryland withholds 8% on winnings over $5,000 for nonresidents, and you’ll see this on your W-2G.

Maryland adds a local “piggyback tax” based on your county. The rate changes depending on where you live and stacks on top of the state tax.

If you had state tax withheld, claim it as a credit on your return. Always match your W-2G to what you report. Don’t just guess.

Filing Deadlines, Extensions, and Payment Options

Federal and Maryland returns are due by April 15 unless that falls on a weekend or holiday. Need more time? File Form 4868 federally and Form 502E in Maryland for an automatic six-month extension. You can find both forms and instructions on the IRS website and Maryland Comptroller’s site.

Extensions give you more time to file, but not to pay. You must estimate and pay any tax owed by the original deadline, or you’ll get hit with penalties and interest.

Maryland lets you pay online through iFile, by check with a voucher, or by credit card. If you win more than $500 and no tax was withheld, Maryland wants an estimated tax payment within 60 days using Form PV (download here).

Recordkeeping: Session Logs, Tickets, Bet History, and Bank Statements

Keep detailed records of your gambling. If you claim losses or your reported winnings don’t match the forms, the IRS or Maryland might ask for proof.

What to keep:

• Session logs with dates, places, and amounts won/lost
• Wagering tickets or receipts
• Online betting history from your casino or sportsbook accounts
• Bank or credit card statements showing deposits and withdrawals

If you claim losses on Schedule A, you’ll need documentation. You can only deduct losses up to your winnings, so accurate records are your backup if you ever get audited.

Sort your records by year. It’ll save you headaches at tax time.

Didn’t Get Form W-2G in Maryland? Here’s How to Report Anyway

Even if you never get a W-2G, you still have to report gambling winnings. The IRS and Maryland Comptroller expect you to be honest. Missing paperwork doesn’t get you off the hook. Use your own records, ask for copies, or make estimated payments if needed. Here’s what to know.

Common Reasons a W-2G Isn’t Issued (Thresholds, ID Mismatch)

Casinos, sportsbooks, and the Maryland Lottery only send a W-2G if your win crosses certain lines. For example:

• Slots or bingo: $1,200 or more
• Keno: $1,500 or more (after wager)
• Poker tournaments: Over $5,000 (after buy-in)
• Other games: $600 or more and at least 300 times the bet

If your win is under these, you probably won’t get a form.

Sometimes, a W-2G doesn’t show up because of missing or wrong info – like a Social Security number that’s missing or doesn’t match IRS records. In that case, the casino might withhold more tax but not send the form.

Clerical mistakes can delay forms too. If you think you should have received one, check the thresholds and double-check your info with the payer.

How to Self-Report Using Statements and Bet History

No W-2G? You can still report winnings using your own paperwork. Gather up:

• Bank statements showing casino or sportsbook deposits
• Betting account history from online sites
• Receipts and tickets from in-person bets

Add up all your winnings for the year – not just your net profit. The IRS wants the gross payout, even if you lost more than you won.

Report this as “Other Income” on Schedule 1 of Form 1040. If you itemize, you can deduct losses up to your winnings on Schedule A. Keep all your proof in case of an audit.

Maryland wants these winnings on Form 502 (residents) or Form 505 (non-residents). Attach any paperwork if taxes were withheld. See more details and forms at the Maryland Comptroller’s forms page.

Requesting Copies from Casinos/Sportsbooks

If you think you should have received a W-2G, contact the casino, sportsbook, or lottery office. Give them your name, date of play, and any ticket or account numbers you have.

Most casinos keep digital records and can reissue the form. If your Social Security number or address was wrong, ask for a corrected W-2G.

If they say you didn’t meet the threshold, ask for a player win/loss statement. Many casinos and online sites give these out on request or through loyalty programs. These statements help you report winnings and back up your tax return.

Save copies of any emails or letters in case the IRS or Maryland Comptroller ever asks.

Making Estimated Payments to Avoid Penalties

Maryland wants you to pay estimated state tax on gambling winnings over $500 within 60 days. Use Form 502D (get it here). If you wait until tax season, you could owe penalties and interest.

For federal taxes, you might need to make quarterly estimated payments if there was no withholding. Use Form 1040-ES (IRS info here).

When you figure out what you owe, factor in federal withholding (24% on some winnings) and Maryland’s top rate of 9.25% on winnings over $5,000. Non-residents pay 7.5%.

Paying early helps you dodge underpayment penalties. If you get a corrected W-2G later, your estimated payments still count toward your final bill.

Can You Deduct Gambling Losses in Maryland? Rules & Limits

Yes, you can deduct gambling losses in Maryland, but the rules are strict. Whether you can deduct depends on if you itemize, how much you won, and if you keep solid records. The rules also change if you’re a casual gambler or a pro. It’s not as simple as just subtracting your losses.

Itemized vs. Standard Deduction: When Losses Can Help

You can only deduct gambling losses if you itemize on your federal tax return using Schedule A (Form 1040). Maryland follows the federal rules. If you take the standard deduction, you can’t claim gambling losses at all. See the IRS Schedule A info for details.

The standard deduction is pretty high these days, so lots of people don’t itemize. If you don’t, your losses can’t offset your winnings, even if you lost more than you won.

For example:

• Standard deduction → no gambling loss deduction.
• Itemize → you can deduct losses, but only up to what you won.

Itemizing only makes sense if your total deductions, including gambling losses, beat the standard deduction.

Losses Limited to Winnings: How the Cap Works

You can’t deduct more in gambling losses than you report as winnings. This rule stops you from using net losses to lower other income like your job or investments.

Example:

• Winnings: $4,000
• Losses: $6,000
• Deduction allowed: $4,000 (not $6,000)

This cap applies whether your losses are from casinos, sports betting, or the Maryland Lottery. If you lose more than you win, you just lose out for tax purposes. There’s no carryover to future years.

Proof You Need: Diaries, Receipts, and Digital Logs

You need detailed records to back up gambling loss deductions. The IRS and Maryland check that your paperwork matches your reported winnings.

What counts as proof:

• Wagering tickets or betting slips
• Receipts from casinos or sportsbooks
• Bank statements showing gambling activity
• Digital logs from online betting accounts
• Diary or journal with dates, places, bets, and outcomes

If you don’t have proof, they might deny your deduction if you get audited. Keeping everything organized during the year makes tax time less stressful.

Casual vs. Professional Gambler: Different Rules, Different Risks

Most people count as casual gamblers. If that’s you, your winnings are taxed as ordinary income, and you can only deduct losses as itemized deductions, up to your winnings.

If you’re a professional gambler, things change a bit. You report winnings and losses on Schedule C and can deduct business expenses like travel or supplies, but your losses are still capped at your winnings. The IRS is picky about who counts as a pro – you need to show gambling is your main income, you do it regularly, and you’re in it to make a profit. For almost everyone, the casual rules apply.

Maryland Taxes on Lottery Winnings: Scratch-Offs, Raffles, Casinos & More

Maryland treats lottery and gambling winnings as taxable income at both the federal and state level. How much you keep really depends on the prize size, your residency status, and how you want your payout.

State Lottery Withholding for Residents and Nonresidents

Once your prize hits certain thresholds, Maryland law requires withholding. For residents, the state takes 9.25% of winnings over $5,000. Nonresidents get a slightly lower withholding rate of 7.5% for the same amount.

The IRS steps in too. They withhold 24% federal tax on gambling and lottery winnings of $5,000 or more. If you don’t provide a Social Security number, that backup withholding jumps to 28%.

Even with taxes withheld, you might owe more when you file your return, depending on your total income and tax bracket. You have to report all gambling income, even if it’s under $5,000 and no tax was withheld. Maryland’s own rules are outlined on the Maryland Comptroller’s official site.

Claiming Small Prizes vs. Large Jackpots in Maryland

If you win under $600, just claim your prize at a lottery retailer. It’s still taxable, but you report that when you file your taxes. No upfront withholding for these small wins.

For prizes between $600 and $5,000, the IRS gets notified, and you’ll get a Form W-2G. Maryland won’t automatically withhold state taxes on winnings below $5,000, so you’ll need to set aside cash for taxes later.

Jackpots over $5,000 get both federal and state withholding before you see your payout. You’ll get a W-2G showing what was withheld, and you’ll need that when you file. Local county income taxes might apply too. For official details on forms, see the IRS W-2G page and Maryland tax forms.

Lump Sum vs. Annuity for Lottery Wins: Pros and Cons

Big jackpot winners usually pick between a lump sum or an annuity. A lump sum means you get all your cash at once, minus taxes. That’s fast money, but it could bump you into a higher tax bracket.

An annuity spreads payments out over years. Each payment gets taxed as income for that year, maybe keeping you out of the top bracket. It’s steady, and you don’t have to worry about blowing it all at once.

Your choice shapes your taxes and your whole financial plan. Lump sums give you flexibility for investing or paying off debt, while annuities might help you keep spending in check. It’s a personal call, really.

Gifting Tickets and Sharing Prizes: What to Know

If you hand someone a winning lottery ticket, the IRS calls that a gift. If the ticket’s value goes over the annual exclusion limit (which changes yearly), federal gift tax rules kick in. You might have to file a gift tax return even if you don’t owe any tax. Check the latest thresholds on the IRS gift tax FAQ.

If you split a prize with friends or family, everyone needs to report their share. The group should fill out IRS Form 5754 so each person gets their own W-2G for taxes. Without it, the IRS could treat the whole prize as one person’s income, which can cause headaches. Keep good records of how you split and reported everything.

How Are Group Lottery Wins Taxed in Maryland?

If you share a winning ticket, tax rules change a bit compared to claiming a prize solo. Each person reports their share, and the IRS has specific forms to keep everything straight. Maryland follows federal rules but adds its own tax rates too.

Using IRS Form 5754 to Split Prizes Correctly

If multiple people own the winning ticket, you need to use IRS Form 5754. This form tells the lottery who gets what. Without it, the lottery pays out in one name, and that’s a tax mess.

On Form 5754, you list all winners’ names, addresses, and Social Security numbers, plus how much each gets. The lottery then issues separate tax forms for each person. You can find Form 5754 and instructions on the IRS website.

This way, each person pays tax only on their share, and nobody gets stuck with the whole bill.

One Ticket, Many Winners: W-2Gs for Each Participant

When the lottery handles a group win right, each person gets a Form W-2G showing their winnings and withheld taxes. You’ll need this when you file federal and Maryland returns.

Maryland residents see 8.75% withheld if their share is $5,001 or more. Nonresidents get 8% withheld. Federal withholding is 24%. These come out before you get paid.

Each winner has to report their W-2G on their tax return. If you get more than one W-2G, include them all.

Pool Agreements: Avoiding Disputes and Tax Headaches

Before you buy lottery tickets as a group, make a written pool agreement. List who’s in, who paid what, and how you’ll split the prize. It doesn’t have to be fancy, but everyone should sign and date it. This makes things way easier if you win and the lottery wants proof of ownership. Keep copies of tickets and receipts too.

If Only One Person Claims the Prize: Fixing It After the Fact

Sometimes, one person claims the prize without using Form 5754. Then the lottery puts the W-2G in just that person’s name, so the IRS and Maryland treat it as all their income.

To sort this out, that person reports the full prize, but can list the amounts paid to others as nominee distributions. Each co-winner then reports their share on their own return. It’s a pain, and you’ll probably have to file extra forms. Honestly, it’s much simpler to split things correctly from the start.

Taxes on Multi-State Lottery Wins

If you win a lottery that sells tickets across state lines, both the state where you bought the ticket and your home state might want a cut. Lump sum or annuity choices can affect things, and you’ll need to track credits and reciprocity rules to see your true tax bill.

Buying in Another State: Which State Gets to Tax?

If you buy a winning ticket in another state, that state usually takes its tax first. For example, if you live in Maryland but buy in Pennsylvania, Pennsylvania withholds its tax before you get paid.

Maryland still taxes all the income of its residents, no matter where it comes from. So, you’ll have to report those winnings again on your Maryland return. The rate depends on Maryland’s income tax brackets. Check out the Maryland Tax Calculator for current rates.

Some states, like Delaware, don’t tax lottery winnings. If you win there, you won’t pay Delaware tax, but Maryland will still want its share.

Bottom line: the state where you bought the ticket taxes first, but Maryland expects you to report it too.

Credits for Taxes Paid to Other States (and How to Claim Them)

Maryland gives a credit for taxes you pay to another state on the same income. This stops you from paying double. The credit can’t be more than the Maryland tax due on that income.

To claim it, fill out Form 502CR with your Maryland return. You’ll also need a copy of your tax return from the other state and proof of withholding or payment. If you don’t have documentation, Maryland can deny the credit. You can download Form 502CR and instructions from the Maryland Comptroller’s site.

If the other state’s tax is higher than Maryland’s, you won’t get the full benefit. Say you pay 7% to another state, but Maryland’s rate is 5% – you’ll only get a 5% credit.

Multi-Year Annuities: Tracking Basis and Yearly Income

If you pick an annuity payout, you get taxable income every year instead of a lump sum. Both the state where you bought the ticket and Maryland may withhold taxes each year. You have to report every installment as income on your federal and Maryland returns.

Keep track of your “basis” – that’s the original winnings before tax. Each year, only report what you actually receive. You can’t wait until the last payment to pay tax. The IRS and states count each annual payment as taxable when you get it. For more, check the IRS annuity tax topic.

Keep records of yearly amounts, withholdings, and credits. That way, you don’t miss deductions or pay extra tax.

Reciprocity and Nonresident Rules That May Apply

Some states have reciprocity agreements for wages, but not for lottery winnings. Gambling income is treated differently, so don’t count on reciprocity to save you from taxes.

If you’re a nonresident where you bought the ticket, that state can still tax your winnings. You’ll need to file a nonresident return there and report the income. Maryland will have you include the same winnings on your resident return. For details, see Maryland’s nonresident tax page.

Filing as a nonresident makes sure you pay the right tax and lets you claim a Maryland credit. If you skip filing, you risk penalties or losing the credit. Always check both states’ rules before filing.

What If You Don’t Report Gambling Winnings in Maryland? Penalties & Interest

If you don’t report gambling winnings, you can get hit with tax bills, penalties, and interest from both the IRS and Maryland. If your reported income doesn’t match what casinos, sportsbooks, or the lottery tell tax agencies, you could face more trouble.

Late Filing vs. Late Payment: Different Penalties

If you file your return late, the IRS charges a 5% penalty per month on what you owe, up to 25% of the tax. Maryland adds its own late-filing penalties, which vary by case. Check the Maryland penalty info for details.

If you file on time but don’t pay in full, the IRS penalty drops to 0.5% per month on the unpaid balance, also capped at 25%. Maryland charges daily interest on unpaid taxes until you pay up.

These penalties can pile up. For example:

Situation	Federal Penalty	State Penalty	Interest
Late filing	5% monthly (max 25%)	Yes	Daily
Late payment	0.5% monthly (max 25%)	Yes	Daily

Filing on time, even if you can’t pay it all, keeps your penalties lower.

IRS/State Matching of W-2G/1099 Data: Notices and Audits

Casinos, sportsbooks, and the Maryland Lottery send you a Form W-2G for certain winnings. Online platforms might send you a Form 1099-MISC or 1099-K. The IRS and Maryland both get copies too. Maryland pulls your income data from federal records as well. You can find more info on these forms at IRS.gov and Maryland Comptroller Forms.

If you skip reporting your winnings, the IRS and Maryland Department of Revenue check your return against what they got from casinos and platforms. If they spot a mismatch, you’ll probably get a CP2000 notice for unreported income, plus penalties and interest. Sometimes it feels like they catch everything.

Big or repeated discrepancies can lead to audits. Auditors might dig through your bank deposits, betting records, or other financial info. Even a small win might get flagged if your return doesn’t match what was reported.

Amending Returns (Form 1040-X) and Setting Up a Payment Plan

Forgot to report gambling winnings? You can fix it by filing Form 1040-X for your federal return. Maryland lets you amend with Form 502X. The sooner you amend, the better – you’ll likely owe less in penalties and it shows you’re trying to make things right. Check the instructions for amending at IRS.gov – About Form 1040-X and Maryland Comptroller Forms.

If you can’t pay the full amount, the IRS offers Installment Agreements. You can apply online if you owe under $50,000. Maryland also has payment plans for unpaid state taxes, but just know interest keeps piling up until you’re paid off. See IRS Online Payment Agreement and Maryland Payment Plan Options.

Don’t wait too long. If you hold off until the IRS or state reaches out, you’ll probably pay more since penalties and interest just keep stacking up.

When to Call a Tax Professional

You can handle small fixes yourself, but bigger situations usually go better with a pro. If you got multiple W-2Gs, played in different states, or used a bunch of online platforms, a tax preparer can help you avoid headaches.

Tax professionals can talk to the IRS or Maryland for you about payment plans or penalty relief. If you get audited, they can represent you and help organize your paperwork.

Think about calling a tax advisor if:

• You owe more than a few thousand dollars
• You got an IRS or state notice
• You want to deduct gambling losses the right way
• You’re unsure about how to report multi-state winnings

Does Maryland State Tax Gambling Winnings?

Yep, Maryland taxes gambling winnings as part of your state income tax. This goes for residents and nonresidents who win in Maryland. Whether it’s the state lottery, casinos, sports betting, or horse racing – it’s all taxable here. You can check current tax info at Maryland Individual Income Tax.

Maryland’s income tax rates run from 2% to 5.75%, depending on your income. Plus, counties and Baltimore City tack on local income taxes from 2.25% to 3.2%. So, your total tax rate depends on where you live.

Nonresidents have to pay Maryland tax on gambling winnings made in the state, even if they live elsewhere.

Does Maryland Have a Separate Gambling Winnings Tax?

Maryland doesn’t have a special gambling tax rate. They just treat winnings like any other income. You need to include them on your Maryland tax return.

Sometimes casinos and the lottery withhold taxes when you get paid. Federal withholding is usually 24%, and Maryland may withhold state tax on bigger wins. But if nothing’s withheld, you’re still on the hook to pay the right amount when you file.

You can’t dodge state tax by gambling in Maryland as a visitor. Both residents and nonresidents have to report and pay Maryland tax on winnings made here.

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Frequently Asked Questions

Maryland counts gambling and lottery winnings as taxable income for both federal and state taxes. You might also owe local taxes, depending on where you live. The rules apply whether you win cash or something else, and there are specific forms you’ll need to use.

How are gambling winnings taxed in the state of Maryland?

Maryland taxes all gambling winnings over $500. If you win more than $5,000, the payer usually withholds 9.25% for residents and 7.5% for nonresidents.

You need to report all your winnings, even small ones, when you file your state income tax return. Local taxes might apply, depending on your county or city. More details are at Maryland Individual Income Tax.

What deductions can be made from my gambling winnings for tax purposes?

Maryland doesn’t let you deduct gambling losses on your state tax return.

At the federal level, you can write off gambling losses, but only if you itemize on Schedule A. Your losses can’t be more than your total winnings for the year. The rules are at IRS Topic No. 419 – Gambling Income and Losses.

Are lottery winnings treated differently than other gambling earnings for tax calculations?

Lottery winnings get taxed just like other gambling income at both the state and federal level.

The main difference? Lottery wins often trigger automatic withholding if you win big, while smaller wins from other gambling might not.

What are the tax reporting requirements for gambling winnings in Maryland?

You have to report all gambling winnings on your federal tax return using Form 1040. If you get a Form W-2G, use that info to report both your winnings and any taxes withheld. Check the form at IRS.gov – About Form W-2G.

For Maryland, residents file Form 502 and nonresidents file Form 505. If you have any W-2G forms showing Maryland withholding, attach copies. Maryland forms are at Maryland Comptroller Forms.

How does Maryland state tax on gambling winnings compare to federal tax obligations?

The federal government usually withholds 24% on gambling winnings over $5,000, though your final tax rate depends on your whole income picture.

Maryland’s withholding is lower, but you still owe state income tax on anything over $500. Local income tax rates can bump up what you owe, depending where you live.

Can losses from gambling be claimed on my tax return in Maryland?

Maryland doesn’t let you claim gambling losses on your state tax return. That’s just how the state handles it – no exceptions there. For official details, you can check the Maryland Comptroller’s website.

On your federal return though, you can deduct your gambling losses if you itemize deductions. Just remember, you have to keep your receipts, tickets, or statements to show your losses, and you can’t deduct more than what you actually won. The IRS has more info on this at IRS Topic No. 419 – Gambling Income and Losses.