Can gambling winnings affect your tax bracket?

[tdubbz02]

For example, if someone won 25,000 and 25% tax was withheld (W2G) prior to payment; when filing your tax return and entering the winnings as other income could this change your tax bracket i.e. tax rate?

[fanfare]

you will only pay the higher rate on the higher earnings.
So, if your higher earnings are in the form of casino wins, your usual tax rate is not increasing.

[tdubbz02]

Ok, just to clarify. Let's say that your yearly income puts you in the 15% tax bracket after AGI. When you go to file, adding the winnings as other income, and creating a new AGI (yearly income + winnings - deductions) puts you in the 25% tax bracket, would this then become your new bracket?
And if so wouldn't this effectively be taxing the winnings twice since taxes were already withheld when the winnings were claimed?

[SweetieJean]

No.You are not taxed twice, as TT gives you credit for the taxes withheld (just like with your paycheck).

[Hal_Al]

Yes. See https://taxfoundation.org/2017-tax-brackets/

Taxable income is gross income minus exemptions and deductions

[tdubbz02]

Ok, just to clarify. Let's say that your yearly income puts you in the 15% tax bracket after AGI. When you go to file, adding the winnings as other income, and creating a new AGI (yearly income + winnings - deductions) puts you in the 25% tax bracket, would this then become your new bracket?
And if so wouldn't this effectively be taxing the winnings twice since taxes were already withheld when the winnings were claimed?

[VolvoGirl]

No.  The tax you paid was just withholding like from your paychecks.  You get credit for it on your return with all your other withholding on 1040 line 64..

[Hal_Al]

Yes, 25% becomes your new tax bracket. But your tax bracket  is only your MARGINAL tax rate.  That is, only an additional $ of income is taxed at 25%. In the example you gave ("yearly income puts you in the 15% tax bracket after AGI) your regular income will only be taxed at 15% (some will actually only be taxed at 10%). Some of he gambling winnings will be taxed at 15% and some at 25%. Bottom line for you (if the example fits you) is that you will be getting back some of that 25% withheld on the winnings.