All the winnings for every bet that you place are liable to taxation. It does not matter if the winnings are from a gambling site, a sports tournament, or a Casino. It also does not matter where you win it. You might win it at a casino, a US gambling establishment, in foreign countries, on a cruise or anywhere. If you win, the Internal Revenue Service (IRS) will include it on the tax return.
Will online casinos inform the IRS?
Yes, but only if you win a specified amount or more. All the US gambling establishments like state lotteries, casinos, bingo halls, race tracks, gambling website and so on are required to report to the IRS if you win that specified amount.
They report it by filing the Internal Revenue Services’ Form W2-G, which is a tax form. A copy of this form is provided to you. This also depends mostly on the type of game that you are playing. The casino files the W2-G if you win not less than $1,200 while playing slots and if you earn not less than $1,500 while playing at keno. The IRS will hence automatically come to know about your winnings. Also, if your tax return does not have this income, the IRS team will reach out to you.
Why is it essential to maintain a proper record?
Without maintaining a good record of all your losses and winnings, you cannot qualify for the tax deduction amount. It also might cost you more than what you expect. Hence you need to follow these:
- Your Tax Return must have all your winnings: You must report all the gambling winnings on your tax return, each year. You cannot subtract your losses from your winnings and just report the amount (if any) that is left over. You have to report every victory as well as the amount, even if the winning amount is much less than your losses. A little workaround is when you play at Asian online casino which never share your data with your local tax service.
- You will get a deduction amount only if you can prove your losses as well as your gains: This can be done if you sincerely maintain an excellent report that has both the amounts of winnings and losses. If you fail to do so, you cannot avail deduction tax, and as a result, a tax will be imposed depending on the amount that you have won. What you owe the IRS might multiply, does not matter whether you have gained as much as you have lost or that you have lost more than you have learned.
According to a report, Bill Remos of Chicago who is also a Coca-Cola delivery driver, won $50,000 in one tournament of Blackjack. When he filed his report with the IRS, he did not mention his income since he calculated the amount that he had spent in losses and found that it was equal to the amount gained. He thought that, in the long run, he did not win anything. The IRS audited Remos because he could not show a proper record or list of losses. He was, on the other hand, imposed a tax on $50,000 that he had won in one Blackjack game. A charge of $17,000 was imposed on him!
Remos could have easily been exempted from paying the tax since his gains were equivalent to his losses.
The casinos are watching you. Do not ever think that you have an escape route, because that might lead to an unfavourable outcome. Maintain a good record and report all your winnings and losses to the IRS or switch to abroad casinos such as SCR888.
John Fosdyle is the founder of Web Casino Star. He is a 36-year-old programmer who enjoys golf, cookery, and drone photography. He is tech-savvy and smart, but can also be very nerdish from time to time. He has a degree in computing and obsessed with creating new tech projects and eating pizza.