Colorado Gambling Winnings Tax Calculator 2024: How Much Tax Do You Owe?
Colorado's gambling winnings tax calculator gives users the opportunity to find out how much they'll owe in taxes based on their amount of earnings, whether that's through Colorado sports betting, casinos or lottery.
All gamblers should consider tax obligations that may come even after claiming Colorado betting promos, as well as taxes that may come from other gambling-related wins. We’re going to answer some specific Colorado gambling tax questions, as well as some questions on federal taxes.
Colorado Gambling Tax Calculator
A Colorado gambling winnings tax calculator is a simple tool that allows you to figure out just how much tax you may owe. All you have to do is enter your details, pop in your total winnings amount less your stake and the CO tax calculator does the rest for you.
What Are Colorado Gambling Tax Rates in 2024?
Colorado has a flat income tax rate of 4.40% for all gambling winnings classed as taxable income. And just so we’re clear, all winnings from any form of gambling that is legal in the state of Colorado are classed as taxable income. The state’s flat rate tax system replaced a tiered system where bettors were taxed more the more they won. However, this has now changed and all winnings are taxed at the flat rate.
This means that a bettor will pay a flat rate of 4.40% on any winnings. So if they win $100, the tax will be $4.40. Check that your Colorado gambling tax calculator has the correct rate by using this $100 sample.
What some may find confusing is that casinos and sportsbooks will issue you with a W-2 G form and automatically withhold income taxes from winnings if the winnings total exceed a threshold for that type of game/wager. This is a legal requirement applied only to federal taxes ( not state taxes).
Some people wrongly assume that the W-2 G threshold means that any winnings below that threshold are not taxed. Don’t make this mistake. All gambling winnings are subject to the Colorado income tax rate of 4.40%, even at sportsbooks like BetMGM Colorado. This is regardless of marital status or the size of your total gambling winnings. This is why it’s crucial that you make use of a Colorado gambling winnings tax calculator to check what Colorado gambling taxes are owed.
Are Gambling Winnings Taxable in Colorado?
Yes, all gambling winnings are classed as income in the state and subject to Colorado gambling taxes. The Colorado income tax system is a flat rate system where all income is taxed at 4.40%. This means that regardless of the size of your gambling win, it will be taxed at 4.63%.
It’s worth noting that the 4.40% tax rate only applies to state taxes. You must also pay federal taxes on your winnings. That means that all your winnings no matter how small must be declared on your tax returns to the IRS at the end of the year. For larger winnings above a specific threshold, you must fill out a W-2G form that will be forwarded to the IRS which we’ll go into in more detail a little later.
The most important thing to remember here is that all gambling winnings no matter how big or small are subject to both Colorado gambling taxes and federal taxes. A Colorado gambling winnings tax calculator will help you determine exactly how much tax you owe and to include on your tax returns.
How much money can you win gambling in Colorado without paying taxes?
As Colorado is a flat rate tax state, taxes must be paid on all gambling winnings no matter how big or small with the exception of state lottery wins which are tax free if $5,000 or less. However, for all other types of gambling it’s the same rate. A $10 win at the sportsbook like ESPN BET Colorado is subject to the 4.40% tax just as a $1,000 win is also subject to the same rate and your Colorado gambling tax calculator should reflect this. This is the same for both professional gambling and casual gambling.
There is often some confusion regarding this as casinos and sportsbooks will issue a W-2G form when a bettor’s winnings reach a certain threshold. Some misinterpret these thresholds as minimum amounts that you must win before paying Colorado gambling taxes. However, if you use the Colorado gambling winnings tax calculator in this guide you will see that this is not the case at all.
Explaining Colorado's W-2 G Form
Form W-2G is an IRS form used to report certain types of gambling winnings to the Internal Revenue Service (IRS). The letter "W" in the form name refers to the fact that it is used to report income that is subject to withholding. All gambling winners above the thresholds below must fill out the form.
The types of gambling winnings that must be reported on a Form W-2G include:
- $1,200 or more in slot machine or bingo winnings
- $1,500 or more in keno winnings
- $5,000 or more in winnings from poker tournaments
- $600 or more in other gambling winnings (such as the Colorado State lottery horse racing, dog racing, or jai alai)
The Form W-2G includes information such as the date and type of the gambling activity, the name and address of the casino or whatever gambling venue where you played and won, the amount of winnings, and the amount of federal and state taxes withheld. In some cases, there may be no taxes withheld or a basic rate that is not necessarily the full amount owed on the winnings is withheld.
Anyone who receives a W-2G form from a casino or gambling operator such as FanDuel Sportsbook Colorado must fill it out and include their social security number (SSN). Then the same winnings must be declared on their tax return at the end of the year. The IRS can then compare the gambling records received from the operator reporting gambling winnings with the information filled out in the bettor’s yearly tax return.
It’s crucial to point out that the W-2G form is not a state-specific form. This is for calculating federal taxes on any income earned through gambling or to put it simply, taxes on gambling winnings. However, filling out a W-2G form does not mean that you are covered for Colorado gambling taxes. You should use our Colorado gambling tax calculator to determine your state tax liability which is separate from your federal income tax liability.
Can I Deduct My Gambling Losses On My Taxes In Colorado?
Yes, you can deduct gambling losses on your taxes in Colorado when reporting gambling winnings. However, as simple as this may sound, the process itself is quite time consuming and perhaps a little frustrating. This is because, as you can imagine, the state does not accept your word for losses and old bet slips won’t quite cover you for your tax deduction.
Instead you will need to keep very detailed records of your gambling activity through a gambling log. This is perhaps a little easier to do when using credit cards or bank accounts to fund gambling. However, even when using cash, you will need to log your gambling sessions with dates and times and amounts spent. In some forms of betting you can get proof of your spending and your losses and this will certainly help in the case of an audit.
However, it’s worth mentioning that you can only deduct gambling losses against your gambling winnings This means that if you have won more than you have spent over the course of the year, deducting your losses will have no effect on your Colorado gambling taxes. If you are not sure how much tax you owe, it's a good idea to speak with a financial advisor.
What Happens If I Forget To Report Gambling Losses Or Winnings In Colorado?
Failing to report gambling losses or winnings can have a significant impact on your tax returns but in completely different ways. For example, if you fail to report your losses, you cannot offset those losses against any winnings you may have received during the year. What this means is that you could possibly end up paying more taxes on your winnings than is necessary.
On the other hand, if you fail to report your winnings from the latest Fanatics Sportsbook Colorado promo code as taxable income, the repercussions can be much more serious. Any failure to report taxable income to the Colorado Department of Revenue (DOR) can result in an audit or a fine. Even just filing your return late or making a late payment can result in a penalty of 5.5% of the tax due for each month that it is not paid.
This is why we always recommend using a Colorado betting tax calculator each time you win any amount through gambling. Then make a record of the tax amount immediately and keep that with your tax records for the year. It’s also a good idea to check any Colorado gambling winnings tax calculator that you use with a sample amount to ensure that it is using the correct rate for that tax year. Currently, the Colorado income tax rate is 4.40% for all taxable income.
Colorado Lottery Taxes
Colorado lottery taxes are slightly different from other forms of taxes on taxable income or gambling winnings. Any lottery winnings up to $5,000 are not subject to any Colorado lottery taxes at all. However, any lottery winnings from $5,001 up will be subject to a flat state tax rate of 4% and federal taxes of 24%.
So for example, if your lottery winnings came to $100,000 on the Colorado state lottery, you would pay $4,000 in Colorado lottery taxes and $24,000 in federal taxes. This 28% is withheld from your lottery winnings by the lottery so you don’t need to worry about making the payment. If you fail to provide a social security number (SSN) the federal income tax rate jumps to 30% bringing your tax rate to 34% including state taxes.
If your lottery winnings are over $600, you will be required to fill in a W-2G form as federal income tax laws require. Even though you do not pay Colorado lottery taxes on the prize, it must still be declared on your tax return.
How Are Group Lottery Wins Taxed In Colorado?
Group Colorado state lottery winnings are subject to the exact same Colorado lottery taxes as individual lottery winnings. However, Colorado lottery taxes will be calculated on an individual basis for each member of the group. This means that each individual will need to fill out a W-2G form that lists the amount of their share of the prize. If the prize is larger than $5,001 but the individual shares of the lottery winnings are less than the threshold, it’s unlikely that any Colorado lottery taxes will be withheld if the prize is paid out in shares as opposed to the full amount. However, this is something that needs to be discussed with Colorado State lottery representatives. In fact, the Colorado state lottery will give you access to a financial advisor who will help you with this.
Taxes on Multi State Lottery Wins
Interestingly, there are no major differences between multi state lottery taxes and Colorado state lottery taxes for lottery winnings. This is because multi state lotteries collect taxes at the local tax rate for the prize winner.
So, for example, if a person in New York wins the Powerball jackpot, they must pay federal taxes at a rate of 24% and local state taxes at a rate of 10.9%. However, if a player in Colorado wins the Powerball jackpot, they must pay 24% in federal taxes and 4% in state taxes — the same rate for the Colorado State Lottery.
What Happens If I Don’t Report My Colorado Gambling Winnings?
Not declaring your taxable gambling winnings on your yearly tax return is a serious offense. This is because gambling income or gambling winnings is considered taxable income by state and federal law. The only exception to this rule is winnings from the Colorado State Lottery which allows you to win up to $5,000 tax-free. However, even those winnings must still be reported on your tax return even though they are not subject to taxes.
All taxable gambling winnings in the state of Colorado are subject to local taxes of 4.40% with the exception of the Colorado State Lottery which has a local tax rate of 4%. This means that any gambling income from all forms of gambling are subject to both local income taxes and federal taxes. Any failure to report these taxable gambling winnings as taxable income will result in action being taken against you by the local Colorado Department of Revenue and possibly the IRS.
How Does The IRS Know If You Won Money Gambling?
Gambling winnings or gambling income at casinos and sportsbooks that are above certain thresholds will trigger the issuance of a W2-G form. This form will be issued by the gambling operator and must be filled out if your winnings are above the following thresholds:
- Slots and bingo - $1,200
- Keno - $1,500
- Poker - $5,000
- Lottery - $600
- Casino games - $600
- Horse/dog race wagering - $600
Once those thresholds are exceeded, the gambling operator will collect your information on the W-2G form and send it to the IRS. At the end of the tax year, your return must match the information on file with the IRS and local tax department. In most cases, the casino with withhold income taxes before paying out your lump sum.
This is how the IRS is already aware of any substantial winnings before you file your federal income tax returns. However, this does not mean that any winnings below those thresholds will be overlooked or that they are not taxable. Any discrepancies when you file your return could trigger an audit and any undisclosed gambling winnings will be found during that audit and added to your tax bill. This could lead to a financial penalty for gaming tax which could increase incrementally until the amount owed on your tax bill is paid.
In short, it’s highly likely that the IRS will learn of your gambling winnings especially when you win big at places like bet365 Colorado. So it's best to stay ahead of the game and use a Colorado gambling tax calculator to make sure that you have paid your any owed gaming tax in full. Otherwise you could receive an unexpected tax bill.
Colorado Sports Gambling Tax History
In November 2019, Colorado voters passed Proposition DD, legalizing sports betting in the state. Then, in May of 2020, the first retail and online sportsbooks began accepting wagers. The industry took off and there are now sportsbooks at most casinos in the state. There are also about 20 online sports betting apps in Colorado which is one of the highest numbers of any state in the USA.
While sports betting was legalized long after casino gaming entered the state, it is still viewed in the same light by regulators and income tax authorities. This means that like casino winnings or any other form of gambling, sports betting winnings are considered a taxable income. They are also subject to the same flat income tax rate of 4.40% as all types of taxable income and gambling winnings.
In the past, the Colorado income tax rate was set at 4.63%. This then dropped to 4.55% and as of January 2022, the new rate is now set at 4.40%. This means that all sports betting winnings are subject to the 4.40% state tax regardless of the amount. Of course, this is only applied to the actual winnings and not the wager amount or lump sum payout. So when using a Colorado betting tax calculator make sure to enter only the winnings and not the lump sum payout which usually includes yours returned stake.
It's also important to note that all sports betting winnings are also subject to federal income tax at a rate of 24% if you provide a social security number. The federal gambling tax rate increases to 30% if you do not provide a social security number.
Colorado Gambling Tax FAQs
Yes, the state of Colorado taxes all gambling winnings from any gambling activity of any amount with the exception of lottery winnings of $5,000 or less. A Colorado betting tax calculator will help you determine how much tax you owe.
The Colorado tax rate for gambling winnings is set at 4.40%. This is the flat rate for all income taxes in the state and the rate that you will find in your Colorado gambling tax calculator. However, winnings are also subject to federal income taxes at a federal gambling tax rate of 24%.
No, lottery winnings and sports betting winnings are not quite the same. While both are subject to Colorado gaming tax of 4.40%, lottery winnings are only taxed if the prize is more than $5,000 while sports betting winnings are taxed no matter how small the winnings may be. This Colorado tax calculator may not reflect this exception.
You must pay taxes on all gambling winnings in the state of Colorado with the exception of lottery winnings that are $5,000 or less. Your Colorado gambling tax calculator should show that all other forms of gambling winnings are subject to taxes no matter how big or small the winnings are.
Yes, you can deduct your gambling losses from your gambling winnings. However, it is crucial that you keep exact records of all gambling activity and spending in case proof of spending is required during an audit. This is why it’s essential to use a Colorado betting tax calculator throughout the year.
The federal tax rate on all gambling winnings is set at 24%. This rises to 30% if you do not provide a social security number (SSN) and is payable on all gambling winnings with the exception of lottery winnings up to a maximum of $5,000. Note: your Colorado gambling tax calculator will not include federal taxes.
Author
Ciaran has written for both the sports betting and iGaming industries for over a decade. He is a true sports fanatic, and he covers a wide range of sports and online casinos in Ontario for BetColorado.com, but his first love will always be soccer.
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