The Internal Revenue Service just can’t stay out of your pockets, even when you are taking risks to earn. In fact, the IRS believes it is entitled to your winnings if you have good luck worth $600 or more at a horse track or casino, $1200 or more if you hit at bingo, and when you bring in $1500 or above playing keno.
The Internal Revenue Service refers to these sums, as “qualifying amounts” and the establishment where you are gambling will take your social security number and issue you an IRS form W-2G when you reach these “qualifying amounts.” It’s important not to try and trick the house by supplying a false social security number, as it could land you in a lot of hot water.
Even though the gaming establishment will not report lesser earnings, it is your duty to report them on your income tax return, none-the-less. Although the Internal Revenue Service probably would not catch on to your small winnings, since the gaming establishments don’t report them, they may get suspicious if you are only reporting gambling earnings associated to a W-2G. They figure that you are just not reporting your lesser earnings since you obviously gamble.
You can deduct your losses at gaming establishments, but not if your losses exceed your winnings. If your losses do exceed your winnings, maybe you should quit gambling, right? online casino
If you like to gamble, it is probably smart to keep a recorded account of your earnings and losses, including where you won and lost, and when.
You must report all monies received from gambling and any non-cash winnings, as well, on your 1040 income tax return. You cannot file a 1040EZ form when reporting your gambling winnings, as you will need to itemize these earnings and deductions. If taxes were withheld from your winnings, you need to report that on the W-2G form the gaming establishment will send you in the mail and transfer it to the total payments section on your 1040 form when filing your income taxes.
To prevent the Internal Revenue Service from getting too curious, you should attach all forms, including the W-2G to your income tax return.
Also be aware that any “comps’ you receive from a gaming establishment are also considered taxable by the Internal Revenue Service. In this case, you will need to figure the fair market value of the “comps” in order to comply with reporting them.
If you occasionally go to Las Vegas to try your luck, IRS wants those details! Whatever is the outcome of your effort – you win on your lose – you should report it to IRS. If you don’t, then what happens? Well, don’t allow IRS to be too curious! Chintamani Abhyankar explains.