Gambling Win Loss Statement Taxes
Inrecent times, the number of people who travel to gambling centers orregions where gambling is a lucrative business is on the high side.Reno and some cities of Las Vegas welcome several travelers for thispurpose.
You’ll report the $8,000 win on your return, the $6,000 loss deduction on Schedule A, and still owe taxes on the remaining $2,000 of your winnings. And should I have one? A W-2G is an official withholding document; it’s typically issued by a casino or other professional gaming organization. The rule for claiming gambling losses is that you can only claim up to the dollar amount you won gambling. If Form 1099G from the IRS shows gambling winnings of $5,000, you can claim losses of no more than $5,000, even if your losses were far greater. Before you can begin your Wisconsin state tax return you must complete your federal income tax.
Justso you know, if you win big while gambling, you do not get to keepevery cent to yourself. Now someone is asking, why? Well, gamblingwinnings are taxable! …it’s as simple as that!
Since gambling winnings are federally taxed and it is illegal not to pay taxes, you should report them correctly. Since gambling losses can offset the taxes paid by earnings, keeping good records is imperative. Your tax preparer will be able to answer any questions and help you with the miscellaneous deductions, including your gambling losses. Continuing with our example, if you want to deduct gambling losses, you must declare the entire $15,000 you won (higher tax bracket), then separately deduct $15,000. And for every dollar you deduct, the IRS expects you to keep detailed records. Income: The IRS has made this very plain: in their online advice under “Tax Topics: Topic 419, Gambling Income and Loses”, the IRS said in no uncertain words that ” Gambling winnings are fully taxable and you must report the income on your tax return.” (The IRS also provides an interactive online 10-minute interview for gamblers; the.
So,just before you embark on any journey for the sole aim of gambling,take some lessons on tax laws relating to gambling and be sure tounderstand every piece of information you find therein just so youavoid the Internal Revenue Service (IRS) and its stress.
A little explanation of why gambling income is taxable.
Now,you’ll ask … “is gambling income taxable?” well, don’tstress it, the answer is not far- fetched!
Yes!Gambling income is taxable and just before the smiles on your facedisappears into thin air, there is good news for you as an earner…hang in there!
Unlikenormal income taxes, taxes placed on gambling are constant. That is,not progressive.
So,you have nothing to worry about. Be it winning a $3 million at thepoker table or $1500 at the slot machine. So, when you hit a big one,25% of your big win is to go to whichever game you play.
Plus,you will be provided with an IRS form which is also known as a W2-Gto enable you to report your earnings and winnings to the government.Keep in mind that this threshold depends on the type of game.
Gambling Win Loss Statement Taxes
Anothersuitable question to ask is this, “do these games report theirgambling earnings? Definitely!
Aquick look at some examples; for specificity, in the casino, in orderfor your winnings to be reported, there is one inevitable thresholdthat should be declined.
Anotherexample is the slot machines; for winnings above $1200, it isrequired of you to report them.
Forthat of horse tracks, winnings that are greater than $600 or that are300 times your initial wager must be reported.
Thecase is not different for bingo as it is similar to the slot machine.Every winning from $1200 should be reported.
Thepoker tournament is no different as every winnings Greater than $5000must be reported.
Inspite of all these, it is not required of Casinos to hold taxes orissue a W2-G that was mentioned earlier in this article to playerswho win big amounts at some table games. For example, roulette,blackjack, craps.
Thereason for this kind of segregated requirement made by the IRS isunknown to us perhaps but known to them.
Froma well-observed point of view, in the table games, a level of skillis required whereas the slot machines are merely a game of chance.So, it is not expected of casinos to ascertain for sure the amountyou begin with when you cash in your chips from a table game.
Nowyou ask, “What happens when a W2-G is not sent to me or whathappens when I do not get a notification? Your question might also beasked in this form… What happens if my taxes are being withheldfrom blackjack winnings?
Beforeyou raise your hands high in the air while smiling thinking you canoutsmart all these, just a gentle reminder, not receiving a W2-G formor having withheld taxes does not relieve you of your duties toreport whatever is been won to the IRS.
Thenext question that should readily come to mind is “what should Ido in cases like this?” It’s simple! Do it yourself! You willsave yourself a whole lot of mess by filing your taxes alongside yourother taxes for the year rather than at the casino where you claimyour winnings.
Now,someone is saying, “oh! I’m a professional gambler, gambling iswhat I do for a living, mine is quite different, how do I report mytax?”
Ifgambling happens to be your real profession then, your revenue willbe tagged as regular earned income hence, it will be taxed at thenormal effective income tax rate of a taxpayer.
Keepin mind that your income and expenses compulsorily must be recordedon Schedule C, if you are self-employed.
Hereis a poser. Ever wondered if individual states tax gambling winnings?Well, to answer the poser, certainly, they do.
Insome states, it is required of gambling winners to claim theirwinnings in the state where they were won irrespective of your placeof domicile. Also, your state of residence will require you to reportyour winnings but, at the same time give a deduction for the taxesthat have already been paid in the non- resident state.
Seemslike we are missing out on something really important which happensto be our big question for this article.
Everthought of what will happen if you do not report your gamblingwinnings? Well, enough of the rambles and mumbles as your eye-rollinghas confirmed the answer. Well, we know it’s a “No” simplybecause when that thought crossed your mind, you waved it off withthe back of your hands.
But,guess what? Dust your rackets as we will be hitting off some balls ofquestions as regards that.
Itis quite easy to shrug off the idea of reporting your gamblingearnings whenever that thought creeps into mind because we all wantto enjoy our bucks without any external force trying to snatch itfrom us.
Sosad! Now might not be a perfect time to let that slide as you do notwant to get involved with the IRS. Bet it could get messier thanimagined.
Aswe all know that the most difficult thing in the world to understand,as stated by Albert Einstein, is the concept of income taxes.
However,it is pertinent that you report the full amount of your gamblingwinnings as “other income” on line 21 of form 1040 asstated by the IRS. Also, you must distinctly claim your allowablegambling losses.
Itis unknown to many that the IRS does not permit reducing or netting,gambling winnings by gambling losses and just reporting thedifference. Well, it is considered that such a person owes the IRSback taxes, interest and penalties.
Justso you know, gambling losses up to your winnings must be claimed asan itemized deduction on Schedule A, under the heading “othermiscellaneous deductions”. Where the problem lies is that asidesnetting, there are more than 65% of taxpayers who don’t itemize theirdeductions and can’t deduct gambling losses pay more tax on grosswinnings than they won.
Besides,losses accumulated from gambling cannot be moved forward tocounterbalance winnings in another year.
Incase you haven’t heard, the IRS takes a hard line on gambling income.Hence, in an audit, without providing enough documentation, the agentwill fail to believe you’re losing all winnings. That is, you musthave sufficient documentation to prove your loss so, keep your losingtickets alongside all other important documents you’ve got.
Whatwill a proper record-keeping require of you?
Aproper record-keeping will require a date, the type of gamblingactivity or wager, the name of the gambling establishment, theaddress of the gambling business and the number, list of peoplepresent with you plus the inevitable, amount won or lost.
Insome cases, it will be of utmost importance for you to keepsupplements hotel bills, gas cards, and airline tickets just to provethat they were not part of ATM gambling funds.
Sometimes,the IRS fails to take into consideration the credibility of the ATMreceipts forgetting that the ATM cash receipt could have been used topurchase the nondeductible like cinema bills, spa treatment, salon,restaurant meals.
So,we urge you to input all the ATM funds received to fund the gamblingsessions as evidence for your gambling records.
Keepin mind that the IRS kicks against the player’s reward card as it ismost times an ingenuine way to prove gambling loses because othergamblers have used the card.
Youridentity and evidence that you were the only one using the cardshould all be in your gambling records.
Yourgambling log is being supported and given credibility by document andwin-loss reports. So, put your journal to substantiate the player’scard at every gamble.
Inconclusion, we urge you to be careful just in case because manystatements do not provide substantiative evidence simply becauseestimates are being used. Also, do not hesitate to report every ofyour gambling winnings.
Cheers!
The IRS isn’t leaving gambling reporting to chance. It has issued new final regulations clarifying and expanding the rules for payors of slot, bingo and keno winnings. Most notably, in response to an outcry from the gambling industry, higher ...
The IRS isn’t leaving gambling reporting to chance. It has issued new final regulations clarifying and expanding the rules for payors of slot, bingo and keno winnings. Most notably, in response to an outcry from the gambling industry, higher thresholds for reporting responsibilities were retained (IRS Reg. 1.6401-10, 12/29/16).
“Commentators overwhelmingly opposed the idea of reducing these reporting thresholds. Payors opposed lowering the thresholds because it would result in more reporting, which would increase compliance burdens for the industry,” said the IRS in the regulations. “In fact, many commentators suggested that rather than reducing the current thresholds, they should be increased to account for inflation. These final regulations do not change the existing reporting thresholds for bingo, keno, and slot machine play.”
For taxpayers, gambling winnings are treated as taxable income on federal income tax returns, but the tax may be offset by losses up to the amount of the winnings. For example, if you win $5,000 during the year and incur losses of $4,500 in the same year, you owe tax on only $500. The losses are reported on Schedule A, but aren’t subject to the usual 2%-of-AGI floor for miscellaneous deductions.
For businesses, information reporting is required for payments of $600 or more to a taxpayer during the year. While temporary regulations had boosted the reporting thresholds for winnings from bingo games and slot machines to $1,200 and $1,500 for keno games, proposals would have lowered these amounts back to $600.
The information is reported on Form W-2G, “Certain Gambling Winnings,” which must be filed by February 28 of the following year; March 31, if filed electronically.
Gambling Win Loss Statement Taxes
Now the new regulations hold the line on the reporting thresholds for bingo, slots and keno games. The regs also retained the rules, with minor modifications, on identifying information that must be provided by gamblers. In addition, they adopted an “aggregate reporting” rule, with winnings for a single gambling session being allowed as an alternative to reporting each win that exceeds the required threshold. A single session is defined as the time between a gambler placing a wager on a certain game and completing the last wager on the game before the end of the same calendar day.
The IRS also agreed to allow gambling institutions to use “gaming days” instead of calendar days for reporting periods if its use is uniform. Gaming days are generally used for other accounting purposes.
Finally, the new final regulations did not include proposed rules that applied to electronically tracked systems for slot machines. The proposed regulations required reporting for winnings at least $1,200 within a calendar day session. However, the casino industry successfully argued that the technology would not support this and that it would “chill customer use.” Count this as a win for the casinos.