Taxes and Gambling
Whenever you win a “qualifying amount” at a casino, they are legally required to report it to the IRS. Therefore, they will collect your social security number and send you an IRS Form W-2G. As such you want to make sure to report these winnings on your tax returns because the IRS obviously already knows about them MEGAGAME. Do not make the mistake of trying to avoid the taxes by giving the casino incorrect information as this is very illegal and could get you into a lot of trouble.
According to the IRS, a casino will need to report your winnings to the IRS if you win: $600 or more at a casino or horse track, $1,200 or more at bingo game, or $1,500 or more in a game of keno. Depending on your winnings the casino may even withhold taxes from your payout
Although smaller winnings will not be automatically reported to the IRS, it is still your legal duty to report them. While the IRS may not catch you in the act if you do not report these smaller winnings once or twice, they may get suspicious if you report gambling winnings often, but only those that are verified by a W-2G Form.
You must report your gambling winnings, prizes, or non-cash prizes on your Form 1040 come tax season. They will need to be put on line 21, with “other income”. 1040EZ forms cannot be used to report gambling winnings
In addition to reporting your gambling winnings, you will also want to deduct your gambling losses. However, you cannot report gambling losses that exceed your total gambling winnings. When you deduct the losses, do so on Schedule A on IRS Form 1040 as an itemized deduction.
It is both helpful and smart to keep a thorough log on your gambling activity, including winnings and losses, as well as where the gambling took place. There are several reasons why doing so is a good idea, including but not limited to the possibility of an IRS audit. It will also make things easier when you need to prepare your return next April.
Taxes withheld from your winnings should also be reported in Box 2 of the Form W-2G you receive in the mail. Be sure to report these amounts on your Form 1040 in the total payments sect
To satisfy the IRS, be sure to attach all forms regarding your gambling activity to your tax return. This includes your W-2Gs or any other gambling-related tax documents.
You may think that people who get free hotel rooms, and tickets to shows from places they gamble at are pretty lucky. However, these “comps” do not come without a price. They are all considered gambling winnings by the IRS, and are subject to the same taxes.
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