Gambling and Sports Betting Tax Calculator (North Dakota) 2025

Last Updated on August 20, 2025 by Martin Green

North Dakota Gambling and Lottery Tax Calculator:

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

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

Winning money from a lottery ticket, casino game, or sports bet in North Dakota feels exciting, but the tax bill that follows can get confusing fast. Yes, both federal and North Dakota state taxes apply to gambling and lottery winnings, and you have to report them as income. If you know what percentage gets withheld and how much you’ll actually keep, you’ll dodge some nasty surprises at tax time.

North Dakota’s state income tax is pretty low compared to a lot of other states – rates run from about 1.1% to 2.9%. That might sound small, but once you add the federal withholding rate of 24% on bigger wins, the total tax bite gets real. Whether you win from the state lottery, a casino, or a multi-state jackpot, you owe taxes on the whole thing.

Figuring out how to report winnings, which forms you need, and if you can deduct losses makes the process way less stressful. If you plan ahead and set aside the right amount, you’ll avoid penalties for underreporting. For the official scoop, check out the North Dakota Office of State Tax Commissioner and the IRS W-2G form page.

Key Takeaways

• All gambling and lottery winnings are taxable at both federal and state levels
• North Dakota applies a low state income tax rate of 1.1% to 2.9% on winnings
• Proper reporting and recordkeeping help you stay compliant and avoid penalties

How North Dakota Taxes Gambling & Lottery Winnings: The Basics

Gambling and lottery winnings in North Dakota get taxed at both the federal and state level. How much you owe depends on the type of gambling, your winnings, and whether you live in North Dakota. Federal withholding rules can kick in for bigger prizes, but North Dakota’s rates are still on the lower side.

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

Any money or prize you win from gambling counts as taxable income. That includes winnings from casinos, sportsbooks, fantasy sports contests, raffles, bingo, keno, and lottery tickets. Even non-cash prizes, like a car or a trip, need to be reported at their fair market value.

Sports betting is only legal in North Dakota through tribal casinos, and it’s taxed just like any other gambling income. Daily fantasy sports (DFS) contests are also considered taxable, even though some folks see them as skill-based games.

Small raffle prizes and charitable gaming aren’t exempt, either. If you get a prize of $600 or more, the payer has to report it to the IRS. But you’re responsible for reporting all winnings, even if nobody sends you a tax form.

Federal vs. North Dakota Treatment: What’s Taxed Where

At the federal level, all gambling winnings are taxable and you need to report them on your income tax return. The IRS tells payers to issue Form W-2G for certain winnings – for example, lottery prizes of $600 or more or slot machine jackpots of $1,200 or more.

North Dakota taxes gambling winnings as part of your state income tax. The state uses a progressive system with rates from about 1.1% up to 2.9%. Unlike a handful of states, North Dakota doesn’t let you exclude gambling winnings from taxable income.

If your prize is over $5,000, federal law requires 24% withholding, and North Dakota takes 2.9%. These are credited against your final tax bill, but if you’re in a higher federal tax bracket, you could still owe more.

Residents vs. Nonresidents: Which Winnings Are Taxable

If you live in North Dakota, you have to report all gambling winnings on both your federal and state tax returns, even if you won the money somewhere else. As a resident, your worldwide gambling income is taxable in North Dakota.

Nonresidents only pay North Dakota state tax on winnings earned inside the state. For example, if you head to Bismarck and win at a tribal casino, North Dakota taxes those winnings.

Both residents and nonresidents have to follow federal reporting rules. The IRS wants you to report all winnings, no matter where you live or where you got lucky.

Withholding vs. Estimated Tax: When Each Applies

Withholding happens automatically in certain cases. For example, lottery prizes over $5,000 trigger a 24% federal withholding and a 2.9% North Dakota state withholding. Casinos and other gambling operators also withhold if you hit certain thresholds.

If your winnings are smaller or if withholding doesn’t cover your whole liability, you might need to make estimated tax payments. This often comes up if you win several smaller prizes that add up over the year.

If you don’t pay enough through withholding or estimates, you could get hit with penalties. Keeping solid records of your wins and losses helps you figure out if you need to pay more during the year.

Are Gambling Winnings Taxable in North Dakota? State & Federal Rules

You have to report all gambling and lottery winnings as taxable income. Federal law says you must include these amounts on your return, and North Dakota taxes them too. The type of payout – whether it’s cash, prizes, or digital assets – determines how you report it.

Does North Dakota Tax Gambling Winnings?

Yes, North Dakota taxes gambling winnings. Any money you win from casinos, lotteries, raffles, or online games counts as taxable income under state law. These winnings also go on your federal tax return.

The state treats gambling income just like wages or other income. It gets added to your total taxable income for the year. The exact amount of state tax you owe depends on your income bracket.

For example, if you win $5,000 in a lottery, that gets combined with your other earnings. Both the IRS and the state expect you to report it. North Dakota follows the federal definition of gambling income, so the same reporting rules apply.

Is There a Separate Gambling Winnings Tax in North Dakota?

North Dakota doesn’t have a special gambling tax rate. Winnings are taxed under the regular state income tax system. You won’t see a separate gambling tax line on your return.

Your winnings are taxed the same way as wages, salaries, or business income. The state uses progressive tax brackets, so more total income means a higher effective tax rate.

If you gamble in other states, you might also have to report winnings there. But as a North Dakota resident, your winnings are always subject to North Dakota income tax. This is pretty much how federal tax treats gambling income, too.

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

Casinos and other payers have to give you a Form W-2G when your winnings go over certain thresholds. For example:

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

You might also get a Form 1099-MISC if you win non-cash prizes, like a car or vacation. You need to report the fair market value as income.

Even if you don’t get a W-2G or 1099, you still have to report all winnings. Keeping good records of your play and payouts helps you stay on the right side of both state and federal rules. For more details, see the North Dakota Individual Income Tax page.

Are Crypto Payouts or Promo Credits Taxable in North Dakota?

If you get gambling winnings in cryptocurrency, those payouts are taxable. The IRS treats crypto as property, so you must report the fair market value when you receive it. North Dakota follows the federal rules, so crypto winnings count as state taxable income too.

Promo credits, free play, or bonus offers from casinos aren’t taxable when you get them. But if you use them and win money or prizes, the winnings are taxable. Only the net amount you actually win counts as income.

As gambling moves to digital platforms, including crypto games, expect both federal and state tax agencies to enforce these rules. Industry groups like gaming industry organizations also push for compliance and responsible reporting.

Tracking the value of digital payouts and keeping records of your bonus play helps you report the right amounts on your returns. That way, if anyone reviews your filings, you’re covered.

North Dakota Gambling Tax Rates & Withholding Percentages

When you win money from gambling or the lottery in North Dakota, you have to deal with both state and federal tax rules. How much you pay depends on your total winnings, your tax bracket, and whether you take a lump sum or annuity.

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

North Dakota taxes gambling winnings as part of your state income. The state uses a progressive tax system, with rates from 1.1% to 2.9% depending on your income level.

Smaller wins might fall into the 1.1% bracket, while bigger wins could push your total income into the 2.9% bracket.

You need to report all gambling income, whether it’s from the state lottery, casinos, or online gambling. Even if they took tax out at payout, you might still owe more when you file your state return. You can use a tax bracket calculator to estimate how much of your winnings get taxed at each rate.

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

North Dakota doesn’t have local or city income taxes on gambling winnings. Unlike some states that let cities collect extra tax, here you only pay state and federal taxes on your winnings.

If you live in Fargo, Bismarck, or a small town, your gambling income is taxed the same. There’s no need to worry about extra local rates or city-level surtaxes.

With no local income tax, your main focus is state income tax brackets and federal tax obligations. It’s a bit simpler than in states with layered tax systems.

Federal and State Withholding Thresholds & Percentages

Federal law requires automatic withholding on bigger gambling wins. If your prize is over $5,000, the IRS takes 24% federal withholding right away.

North Dakota also withholds for state taxes on prizes above $5,000, with a flat 2.9% state withholding rate. This way, at least some of your tax bill is paid up front.

Smaller wins under $600 aren’t reported to the IRS by the lottery, but you still need to include them on your tax return. Between $600 and $5,000, reporting is required, but withholding might not happen. Try a lottery tax calculator to see what’s withheld versus what you might still owe. For more info, visit the IRS W-2G form page and the North Dakota Individual Income Tax page.

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

If you win a big jackpot, you usually pick between a lump sum or an annuity. A lump sum means you get all your winnings at once, which can push you into the highest tax brackets that year.

An annuity spreads payments out over years, which might keep you in a lower bracket each year and reduce your annual tax hit.

With an annuity, you pay taxes as you get each payment. With a lump sum, taxes come out right away. It’s worth using a tax bracket calculator to see how each option affects your taxable income.

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

Let’s see how taxes shake out with three examples:

1. Small Win ($500 scratch-off):

• No federal or state withholding when you cash in.
• You still have to report it on your tax return.
• If your income is low, you might pay just about 1.1% in state tax.

2. Big Win ($10,000 lottery prize):

• Federal withholding: 24% – $2,400.
• State withholding: 2.9% – $290.
• Net payout: $7,310.
• Your final tax bill could be higher if you’re in a higher tax bracket.

3. Jackpot ($1,000,000 Powerball win, lump sum):

• Federal withholding: 24% – $240,000.
• State withholding: 2.9% – $29,000.
• Net payout: $731,000 before any other taxes.
• If your federal bracket is above 24%, you’ll owe more at filing time.

Try a lottery tax calculator to estimate what you’ll actually keep and to see how lump sum vs. annuity changes things. It’ll give you a solid idea of what your tax bracket does to your winnings.

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

Report all gambling and lottery winnings as taxable income. Federal and state rules expect you to use certain forms, report clearly, and keep records so you don’t get hit with penalties or slowdowns.

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

Casinos and other payers hand out Form W-2G when your winnings hit certain thresholds – $1,200 or more from slots or $5,000+ from poker tournaments, for example. If your win is smaller, you won’t get a form, but you still have to report it.

Non-cash prizes or other rewards might get you a 1099-MISC instead. Both forms show income you need to include on your tax return.

Report your winnings on Form 1040. Gambling income goes on Schedule 1, Additional Income. If you itemize, you can deduct gambling losses up to your winnings using Schedule A. You’ll need proof, and you can’t deduct more than you won.

You’ll usually juggle W-2G or 1099-MISC for reporting, 1040 for filing, Schedule 1 for the income, and Schedule A if you’re claiming losses.

For more info, check the IRS Form W-2G instructions and North Dakota Tax Department forms.

Where to Enter Winnings on Your North Dakota State Return

North Dakota treats gambling winnings as regular income. Your state return starts with your federal adjusted gross income (AGI), then applies any state tweaks.

Since winnings are already in your federal AGI, they just carry over to your North Dakota return. You don’t usually enter them separately unless you have a special adjustment.

North Dakota’s progressive income tax rates run from 1.1% to 2.9%. Your winnings get taxed at the same rate as your other income.

If the casino withheld taxes, you’ll see it on your W-2G. You can claim that withholding on your state return to lower what you owe.

Check out the North Dakota Office of State Tax Commissioner for more details and online filing options.

Filing Deadlines, Extensions, and Payment Options

Your North Dakota state return is due April 15, just like your federal return. If that falls on a weekend or holiday, it bumps to the next business day.

Need more time? Use Form SFN 52559 to request an extension – just be sure it’s postmarked by the original due date. Remember, an extension gives you more time to file, not more time to pay. Pay any tax you owe by April 15 or you’ll rack up penalties and interest.

You can pay electronically through the state’s Taxpayer Access Point, send a check by mail, or set up an automatic withdrawal when you e-file.

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

Keep solid records to back up your winnings and any losses you claim. Both the IRS and North Dakota tax folks expect detailed proof.

Good records can be:

• Session logs with dates, places, and amounts won or lost
• Tickets or receipts from lotteries, raffles, or casinos
• Bet history reports from your online gambling accounts
• Bank statements showing deposits or withdrawals tied to gambling

If you don’t have decent documentation, you can’t deduct losses. Hang onto your records for at least three years after you file – longer if your winnings are big.

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

Even if you never get a Form W-2G, you still have to report gambling and lottery winnings. The IRS and North Dakota both require you to include all winnings, and skipping this can mean penalties. Use your own records, ask for copies, and make estimated payments if you need to stay on the safe side.

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

Casinos and sportsbooks only send a W-2G if your winnings hit certain amounts. For instance, $1,200+ from slots or bingo, $5,000+ from poker tournaments, or $1,500+ from keno. Smaller wins won’t trigger a W-2G.

Sometimes, you don’t get a form because your name, Social Security number, or address didn’t match up. Even if no form gets processed, your winnings are still taxable.

Also, if the casino didn’t have to withhold federal taxes, they might not send a form. That doesn’t make your income tax-free. It’s still on you to report it.

How to Self-Report Using Statements and Bet History

If you didn’t get a W-2G, just use your own records. Hold onto receipts, tickets, statements, and your online bet history. These back up how much you won and help you total your gambling income.

On your federal tax return, list all gambling winnings as “Other Income” on Form 1040. North Dakota expects you to include the same income on your state return. If you itemize, you can deduct gambling losses up to your winnings, but only if you keep good records.

Lots of folks keep a log with the date, place, type of bet, and amount won or lost. It’s handy if the IRS or state wants to see your math.

Requesting Copies from Casinos/Sportsbooks

If you think you should’ve gotten a W-2G but didn’t, reach out to the casino or sportsbook. Most can pull up your W-2G if you give them your player’s card number or other details.

Online sportsbooks and betting apps usually let you download year-end tax statements. They might not be official W-2Gs, but they’ll have the info you need for your taxes.

Don’t wait until the last minute. Processing can take a while. Save copies of your requests or confirmation emails in case you need to show the IRS or state that you tried.

Making Estimated Payments to Avoid Penalties

If you win big and no taxes get withheld, you could owe both federal and North Dakota income tax. To dodge penalties, make quarterly estimated tax payments through the IRS and ND TAP.

Estimated payments matter if your winnings bump you into a higher tax bracket or if you don’t have enough withholding from your job. Paying as you go helps you avoid underpayment penalties in April.

Use IRS Form 1040-ES and North Dakota’s withholding tables to figure out your payments. Many people pay online for speed. Track these payments so you’re not surprised by interest or penalties later.

Can You Deduct Gambling Losses in North Dakota? Rules & Limits

You can deduct gambling losses on your federal return if you meet a few requirements, but the rules are strict. North Dakota follows the federal lead, so your ability to claim losses depends on how you file, how much you win, and the records you keep.

Itemized vs. Standard Deduction: When Losses Can Help

You can only deduct gambling losses if you itemize on Schedule A of your federal tax return. If you take the standard deduction, you can’t claim gambling losses at all.

For a lot of people, the standard deduction is bigger than their itemized deductions. In those cases, itemizing just for gambling losses won’t help your tax bill.

Here’s a quick look:

Filing Status	2025 Standard Deduction
Single	$14,600
Married Joint	$29,200

If your itemized deductions (including losses) don’t top those amounts, stick with the standard deduction.

Losses Limited to Winnings: How the Cap Works

You can’t deduct more in gambling losses than you report in gambling winnings. This rule applies federally and in North Dakota.

So, if you win $5,000 and lose $8,000, you only get to deduct $5,000. The leftover $3,000 can’t offset your wages or other income.

Starting in 2026, the One Big Beautiful Bill Act limits you to deducting 90% of your losses. If you win and lose $10,000 each, you can only deduct $9,000 – you’ll still report $1,000 as taxable income even if you broke even.

This cap covers all gambling – casino games, sports betting, poker, lottery tickets, you name it.

Proof You Need: Diaries, Receipts, and Digital Logs

The IRS expects detailed records if you want to deduct losses. No proof, no deduction.

Good records include:

• A diary with dates, places, and types of bets
• Receipts, tickets, or statements from casinos or betting apps
• Bank or credit card records tied to gambling activity

Many casinos offer win/loss statements, but don’t rely on those alone. Your own daily log is stronger evidence.

If you gamble online, download your digital transaction history and keep it with your tax files. Organized records make audits a lot less stressful.

Casual vs. Professional Gambler: Different Rules, Different Risks

Most people are casual gamblers. You report winnings as “Other Income” and deduct losses only if you itemize, following the limits above.

Professional gamblers play by different rules. If gambling is your business, you report income and expenses on Schedule C. But, starting in 2026, the 90% cap on losses will hit pros too.

The IRS looks at how often you gamble, whether you’re trying to make a profit, and how much time you spend. Claiming professional status without really qualifying could get you audited.

For most people, gambling is just a hobby, so the stricter rules for casual gamblers apply. For more details, visit the IRS Topic No. 419 – Gambling Income and Losses and the North Dakota Office of State Tax Commissioner.

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

North Dakota taxes lottery and gambling winnings at both the federal and state levels. The amount taken out depends on how much you win, how you get paid, and whether you live in North Dakota or not. Things get a bit more involved if you split winnings or hand off a ticket to someone else.

State Lottery Withholding for Residents and Nonresidents

If you win over $5,000 in the North Dakota Lottery, the state takes out 2.90% for state income tax. The IRS also grabs 24% for federal tax on anything above that amount.

Residents need to put these winnings on their state tax return, and whatever was withheld gets counted as a credit. Nonresidents go through the same withholding, but they might have to file a North Dakota return to sort out the taxes owed. You can find the official forms and filing info on the North Dakota Office of State Tax Commissioner website.

Prizes under $5,000 don’t get automatic withholding, but you still have to report them as taxable income. This rule covers scratch-offs, raffles, and draw games.

Tribal casino winnings might be handled differently, depending on the game and how big the jackpot is.

Claiming Small Prizes vs. Large Jackpots in North Dakota

For prizes under $600, you usually just claim them at the store where you bought your ticket. The lottery doesn’t report these to the IRS, but you’re still supposed to put them on your tax return.

If your prize is between $600 and $5,000, you need to claim it at a lottery office or by mail. The lottery will report these to the IRS, but they won’t automatically take out taxes.

When you win over $5,000, the lottery takes out both federal and state taxes before you get your money. They’ll hand you a Form W-2G that shows what you won and what they withheld.

At casinos, reporting rules depend on the game. For example, slot machine wins of $1,200 or more get reported, but table games might have different requirements. For more details, check the IRS W-2G instructions.

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

If you land a big jackpot, you usually have to pick between a lump sum or annuity payments stretched out over years.

Taking a lump sum means you get all your winnings at once (after taxes). You pay all your federal and state taxes that year, which could bump you into a higher tax bracket.

An annuity spreads out your payments, possibly keeping your taxable income lower each year. But you’re stuck with fixed annual payments, so there’s not much room to change your mind.

Option	Pros	Cons
Lump Sum	Immediate access, flexible use	Higher taxes upfront, risk of overspending
Annuity	Steady income, possible lower yearly taxes	Less flexibility, payments end after set period

Gifting Tickets and Sharing Prizes: What to Know

If you gift someone a lottery ticket, the person who cashes it in is the winner for tax purposes. You can’t claim the prize after you’ve handed off the ticket.

If you claim the full prize and then split it with family or friends, the IRS might call it a gift and apply gift tax rules.

To keep things simple, set up a partnership agreement before you claim the prize. That way, the lottery pays each person directly, and each reports their own share.

Everyone who gets a share still has to pay both federal and state income tax. Each person needs to report their portion on their tax return. For details on partnership agreements and tax forms, see the IRS Form 5754 page.

How Are Group Lottery Wins Taxed in North Dakota?

If a group shares a winning ticket, each person has to handle their own taxes. The IRS and North Dakota Lottery want you to follow specific steps and fill out the right forms so the prize gets split and reported under each winner’s name.

Using IRS Form 5754 to Split Prizes Correctly

Groups need to fill out IRS Form 5754 to split the prize correctly. You list everyone’s name, address, Social Security number, and share of the winnings. You give this to the lottery office, not straight to the IRS.

The lottery uses this info to prepare separate W-2G tax forms for each winner, so only your share of the prize goes under your Social Security number.

If you skip Form 5754, the prize might end up reported under just one person’s name, which can create tax headaches. Always fill out this form before the lottery pays out, or you might end up with problems you can’t fix easily.

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

For group claims, the lottery gives each winner their own W-2G form showing their share and any taxes withheld.

If your share is more than $600, North Dakota reports it to the IRS. If it’s over $5,000, they’ll withhold 24% for federal taxes and 2.9% for state taxes.

Here’s how it breaks down:

Share of Winnings	Federal Withholding	ND Withholding
$600–$5,000	Reported, no automatic withholding	None
Over $5,000	24% withheld	2.9% withheld

Only your share gets taxed, not the whole prize.

Pool Agreements: Avoiding Disputes and Tax Headaches

If you play the lottery with a group, it’s smart to have a written pool agreement. List everyone’s name, how much they chipped in, and how you’ll split the winnings.

This kind of agreement helps avoid arguments if you win. It also gives proof to the lottery and IRS that the prize is shared. Without it, the authorities might treat one person as the only winner, which can cause legal and tax trouble.

Hang on to copies of tickets, agreements, and who paid what. These records can save you if anyone questions who owns what or who owes taxes.

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

Sometimes, one person claims the prize and then hands out shares to others. This can make taxes messy. The IRS will see the full amount as income for the person who claimed it, not for the group.

If you’re the only one on record, you can use Form 1099-MISC to report what you give out to others. This shifts some tax responsibility to them, but you’ll need to keep careful records.

This isn’t the best way to do it. You’ll probably have more paperwork, and the IRS might question the whole setup. If you can, file as a group with Form 5754 before you claim the prize.

Taxes on Multi-State Lottery Wins

If you win a lottery prize in another state, the tax rules can get tricky. Different states might want a cut, and you’ll need to pay attention to credits, where you live, and how annuity payments are reported over time.

Buying in Another State: Which State Gets to Tax?

If you buy a ticket in North Dakota, state taxes only apply if you live there. Nonresidents who win in North Dakota might owe state tax if North Dakota withholds it, but the rate is just 2.9%.

Most states tax their residents on all income, including lottery winnings from other states. So, if you live in Minnesota but win in North Dakota, Minnesota will still tax your prize as part of your state income.

Only two states – Arizona and Maryland – withhold state tax on lottery winnings for nonresidents. Most other states don’t, so your home state usually decides how your winnings get taxed. For more info, check your state’s tax department or see the IRS guidance on gambling income.

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

If you pay tax to another state on lottery winnings, you might be able to claim a credit in your home state, so you don’t get taxed twice.

For example:

Situation	Tax Paid To	Credit Claimable?
ND resident wins in Minnesota	Minnesota	Yes, credit on ND return
MN resident wins in ND	North Dakota	Yes, credit on MN return
ND resident wins in Texas (no tax)	None	No credit needed

Usually, you claim this credit by filing a Schedule for Taxes Paid to Other States with your state return. Attach proof of what was withheld, like a W-2G or withholding statement. For North Dakota, check the official forms page.

The credit only goes so far. If the other state’s rate is higher than North Dakota’s, you can’t claim more than what North Dakota would have taxed you.

Multi-Year Annuities: Tracking Basis and Yearly Income

If you pick an annuity, each payment gets taxed in the year you receive it. You have to report that income every year, even if the lottery commission already took out some taxes before sending your check.

The IRS calls each payment ordinary income. North Dakota taxes the amount you get each year if you live there. Nonresidents only pay state tax if the winnings are considered North Dakota income.

Keep track of your original prize amount, payment schedule, and any withholding. This will help you match up what’s reported on Form W-2G or 1099-MISC every year.

Annuity payments can also affect your tax bracket. Smaller payments over time might keep you in a lower bracket than taking a lump sum.

Reciprocity and Nonresident Rules That May Apply

Some states have reciprocity agreements to avoid double-taxing wages, but these almost never apply to lottery winnings. Don’t assume you’re covered unless your state specifically says so.

If you’re a nonresident who wins in North Dakota, you might still owe tax to North Dakota on that income. But since the rate is low, your home state will probably take the bigger bite.

Always check if your home state wants you to file a nonresident return in the state where you bought the ticket. Even if you don’t owe much, you might still have to report where the winnings came from. For North Dakota nonresident returns, see North Dakota Tax Department forms.

Where you live matters most. If you’re a full-year North Dakota resident, all lottery winnings are taxable in North Dakota, no matter where you bought the ticket. If you only lived there part of the year, only the portion you won while living in North Dakota gets taxed by the state.

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

If you skip reporting gambling winnings, both the IRS and North Dakota could hit you with penalties, interest, notices, or even audits. You also lose the chance to deduct gambling losses if you don’t report winnings the right way. For more on penalties, see the IRS penalties page and the North Dakota individual income tax FAQs.

Late Filing vs. Late Payment: Different Penalties

The IRS looks at late filing and late payment as two separate problems. If you file your return late, you’ll usually get hit with a 5% penalty of the unpaid tax per month, up to 25%. Even being just one day late can trigger this fee. It stings.

If you file on time but don’t pay everything you owe, the penalty is less severe. That late payment penalty comes in at 0.5% of the unpaid balance per month, also capped at 25%. Interest stacks up on top of both penalties until you pay off the balance.

It’s better to file on time, even if you can’t pay in full. You can work with the IRS or your state to arrange payments after submitting your return. So, getting your return in by the deadline really matters, even if your wallet’s a little light.

For more details, check the official IRS penalty information: https://www.irs.gov/payments/penalties

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

Casinos and other gambling operators send out Form W-2G or Form 1099-MISC/NEC for certain winnings. The IRS and state tax agencies get copies of these forms and compare them to what you report on your return.

If you leave out winnings, the system flags it. You might get a CP2000 notice from the IRS or a state adjustment letter. These notices explain the unreported income, recalculate your tax, and tack on penalties and interest.

If you ignore these notices, things can escalate into a full audit. In an audit, you’ll need to show records of your gambling activities, bank statements, or other proof. Keeping good records and reporting everything is the best way to avoid headaches.

More on IRS notices: https://www.irs.gov/individuals/understanding-your-cp2000-notice

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

If you realize you forgot to report gambling winnings, you can fix it by filing Form 1040-X (Amended U.S. Individual Income Tax Return). This form lets you correct your income, deductions, or credits. Here’s the official IRS page for amending returns: https://www.irs.gov/forms-pubs/about-form-1040-x

Amending sooner usually means lower penalties and interest. If you wait until the IRS finds the mistake, you’ll likely pay more. Attach documents like W-2G forms or your gambling records with your amended return.

If you can’t pay the full amount, you can request an IRS installment agreement. This lets you pay monthly over time. North Dakota also offers payment plans for state income tax. Setting up a payment plan helps you avoid enforced collection actions like levies or liens.

IRS payment plans info: https://www.irs.gov/payments/payment-plans-installment-agreements

North Dakota payment plans: https://www.tax.nd.gov/business/withholding-tax/payment-arrangements

When to Call a Tax Professional

Think about getting professional help if you get an IRS or state notice, owe a lot, or face an audit. A tax pro can look over your records, explain your options, and even talk to the tax agencies for you.

They’ll help you claim any deductions you’re allowed, like gambling losses up to your winnings. Without guidance, you might miss out or mess up, which could cost you more.

If you gamble often, a pro can give advice on keeping records and reporting. That way, you’ll have fewer problems down the road and stay on the right side of both federal and state tax rules.

Does North Dakota State Tax Gambling Winnings?

Yes, North Dakota taxes gambling winnings as part of your state taxable income. You have to report the same winnings that you include on your federal return. This covers lottery prizes, casino winnings, and other types of gambling.

The state starts with your federal adjusted gross income (AGI), which already includes gambling winnings. So, those winnings flow right into your North Dakota return.

If you skip reporting winnings on your federal return, the state will probably adjust your state return too. That can mean extra state penalties and interest, on top of what the IRS charges.

State tax info: https://www.tax.nd.gov/individual-income-tax

Does North Dakota Have a Separate Gambling Winnings Tax?

North Dakota doesn’t have a separate or special gambling tax rate. Winnings get taxed under the same individual income tax brackets as wages, interest, and other income.

Your tax rate depends on your total income and filing status. If your winnings bump you into a higher bracket, you could pay more in state tax overall.

Unlike some states, North Dakota doesn’t withhold state tax when you win. You’re responsible for reporting and paying the right amount when you file. It’s smart to set aside some of your winnings for taxes.

---

Frequently Asked Questions

You have to pay both federal and state taxes on gambling and lottery winnings in North Dakota. Federal withholding kicks in for bigger prizes, and the state takes its share once you pass a certain threshold. The exact amount depends on your prize, how you claim it, and your total income.

How are lottery winnings taxed in North Dakota?

Lottery winnings of $600 or more get reported to the IRS. Prizes over $5,000 have 24% federal tax and 2.90% North Dakota state tax withheld. You might owe more when you file your annual return, depending on your income bracket.

What is the tax rate for lottery winnings exceeding $1 million in North Dakota?

The withholding rates don’t change for bigger prizes. If you win $1 million, you’ll see the same 24% federal and 2.90% state rates on amounts over $5,000. But your final tax bill might be higher after you file, since larger winnings can bump you into a higher federal tax bracket.

Are there any exemptions from paying taxes on gambling or lottery winnings in North Dakota?

Nope. North Dakota doesn’t offer exemptions for lottery or gambling winnings. All winnings count as taxable income. You can’t dodge taxes by claiming North Dakota residency, and both state and federal rules apply.

How does the lump-sum payout option affect tax obligations for lottery winnings in North Dakota?

If you take a lump-sum payout, the whole prize counts as income in the year you get it. That could push you into a higher federal tax bracket. The same withholding rates apply, but you might owe more than what was withheld.

What are the differences in tax rates for lottery winnings between North Dakota and other states?

North Dakota’s state tax on lottery winnings is 2.90%, which is lower than what many states charge. Some states go over 8%, while others like Florida and Texas don’t tax lottery winnings at all. Federal withholding is the same everywhere.

How can I calculate the taxes due on a $5,000 lottery prize in North Dakota?

If you win $5,000 in North Dakota, the IRS gets notified, but they won’t automatically withhold taxes since the prize doesn’t go over the $5,000 threshold. You’ll still need to report it as taxable income when you file your federal and state tax returns. Not sure how much you’ll owe? Try using a lottery tax calculator or check out the IRS forms and instructions and North Dakota Office of State Tax Commissioner for more details.