It’s tax time once again and it’s the right time to take a look back on your earnings in year 2013 and report them in tax return. These are the earnings which is in addition to your regular payroll payments or business payments. Even the gains you made while playing online poker or, through any other means which can be termed as gambling.
As per a 2009 study nearly 6.8% of adult population in this country play online poker. Some for fun some for earning money. The win from such activity is taxable, regardless of the state you are living in. More over the taxation on such win is based on honor system. The winning casino will not report your income to IRS. You’ll need to proactively declare that in your tax return.
Related – IRS Note on Gambling win
like a concerned citizen, I’d urge you to declare any such win and as a person in control of financial situation, declare your losses, if any. That would give your back some tax money you owe to IRS. Not declaring your win is a crime and you’ll be charged.
For some, a big night out at the casinos means all tax-related thoughts are thrown out the window. I mean it is a fun night out, and if you win, great, if you lose then it comes with the territory. But, did you know that you must report your winnings? You might have won big at the races and thought, well here is easy money to keep all to myself; definitely wrong.
Your winnings are to be shared with the Internal Revenue Service and as such, you are required to fill in the necessary tax forms. If you choose to ignore your tax obligation and don’t properly file the report, then expect to face serious penalties.
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You may be wondering as to which winnings the IRS is interested in. To answer your question, gambling income includes; lottery winnings, dog and horse races, raffles, in addition to prizes such as trips, houses, cars or any other non-cash prizes among others.
A look at how you can report taxes on gambling wins:
1: Report Winnings
Luckily, casino taxes do not accumulate like income taxes. This means that whether you win a $10,000 jackpot or a $100,000 jackpot, you will owe the IRS the same percentage.
A look at some of the amounts that must be reported and in which winnings:
- $1,500 or more in keno winnings
- $600 or more at a horse track
- $5,000 or more in poker tournament winnings
- $1,200 or more at a bingo game or slow machine
In short, You must report the full amount of your gambling winnings for any given year . You might have won a $30 at the casino and the lottery agent didn’t report that winning, however, it still remains taxable income. It is your duty as a responsible taxpayer to report your winnings. Your report winnings are indicated on line 21, Form 1040.
2: Deduct Losses
On the flipside, all your earnings don’t have to be taxed. This means that, if you report your losses in connection to the overall itemized deductions, then the money that the IRS will tax is reduced.
In case you itemize deductions, then you can make deductions of your gambling losses for the year on line 28, Schedule A(Form 1040)
On the bright side, it may not be necessary to pay taxes on all your winnings. You can instead itemize, or offset taxes owed on your winnings by reporting any losses that you sustained as well. You are allowed to claim as much as the total amount won that appears on 1040, this way your taxable gambling income would be eliminated.
Related – 20 tax return mistakes to avoid
3: Keep Track of your winnings and losses
Remember to keep accurate records because if you wish to deduct gambling losses, then you must have statements, receipts, tickets, and documentations of your losses or winnings for when you have to answer to the IRS concerning the claim.
To conclude, you must still play your role in the society properly. Besides, paying taxes isn’t for the government, it is for also for you, your family, and the country you live in.