Source: finance-monthly.com

Tax Tips and Tricks for Gambling Winnings and Losses

It is not a secret that gambling has become an activity available to everyone. Together with the development of technology, the number of online casinos started to grow. There are many of them like PlayAmo Australia where you can enjoy a wide range of games. Despite that, casinos like that will always offer different rewards like bonuses, discounts, and free slots.

Anyway, availability is not the only reason why online gambling is popular in all parts of the globe. People around the world are different, but they all have a common problem. They are looking for an additional way to improve their financial stability and online gambling allows them to do that. Despite that, people are also looking for ways to make their free time entertaining. Keep in mind that advanced technology has also changed the mentality and habits of people. Many of them would rather decide on spending their free time at home. Despite movies and music, gambling sites can bring the necessary excitement and entertainment.

Yet, that doesn’t mean you should not be a responsible person. There are two things you need to take care of at every moment. First of all, you have to carefully spend your money in online casinos. That means you will have to organize your budget in the right way. Spending more than you can afford does not have any sense.

Despite that, you also need to take care of the taxes. We know that taxes are not a popular subject among gamblers. However, not paying enough attention to them can bring some additional problems to your life. Because of that, we would like to share some tax tips and tricks for gambling winnings and losses. We are sure the list of our suggestions will make the entire process easier for you. Let’s find them out together.

Get Familiar with Form W-2G

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Even today, people need to learn how to deal with a big amount of paperwork. One of the forms that are going to be essential for you is IRS Form W-2G. It is a document that you need to fill when your payouts are bigger than $600. The same rule counts when your payout is 300 times bigger than the amount of your wager.

You should also know that different games have different requirements. When we talk about thresholds, they are $1200 for slot machines and bingo. When we talk about winning a reward at poker tournaments, the thresholds are $5000. In those cases, it doesn’t matter if the payout is 300 bigger than your wager or not.

When filling the form, you will also need to bring documents to confirm your identity. You will have to provide a photo ID as well as the Social Security Number.

Don’t Try to Hide Any of Your Winnings

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Let’s imagine that you are not an active gambler. Each month, you do not invest than more $100, and your winning is not higher than $200. Because of that, you decided not to report your winnings. There is no reason to do that. It doesn’t matter if you one $10 or $10000. You need to report all the winning on your tax return.

However, here comes the more interesting part. You will need to report those winnings as other income. For something like that, you will need to get a Form 1040 known as Schedule 1. On the other hand, people do not always win the rewards in form of money. Maybe you got a vehicle as one of the most loyal players of the casino. In that case, you will need to report the fair market value of the non-cash prize as income.

The Losses Can Potentially Be Deductible

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There is no such thing as a gambler who didn’t have a bad night at a casino or gambling site. If you are a complete beginner, we need to say you should not expect winning strikes too often. However, there is also one more important information for your gambling career. Some of the losses you have can potentially be deductible. More precisely, there are a couple of catches we need to highlight here.

First of all, you need to itemize the losses if you want to deduct them. For something like that, you will have to use the Schedule A form. Yet, the same rule does not count for the professional gamblers. We will highlight later what gambling experts need to do. Anyway, in the last three years, the gambling laws are a bit modernized and adjusted to the current situation. Thanks to reforms in 2017, the government doubled the deduction we had before.

As we said, things for professional players are a bit different. They can report their gambling losses as business expenses. For something like that, they will have to fill the Schedule C form. Itemizing will be unnecessary in their case. Still, there is another thing important for those people. Gambling must be a primary source of their income. If it is just a sporadic activity, the rules we just highlighted do not count for them.

Keep the Records and Ensure Peace of Mind

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For the end of this article, we need to highlight the common problem of gamblers. Most of them do not even know how much money they won and lose in one year. Because of that, the best possible solution they have is to keep the records of both. You should use a notebook or different apps where you can make the proper calculation. It would be enough to highlight the date when you gambled as well as the type of wagers or gambling games you played. Logically, despite that, you also need to write down the casino where you played. The same rule counts for people that are bigger supports of the gambling sites.

Additionally, you have to provide the pieces of evidence that confirm your losses and winnings. The evidence can come in form of canceled tickets, credit records, bank withdrawals, etc. Together with all documents, you need to fill the W-2G form. In that way, you will be sure that everything you have done is legal.

About Jeanette Iglesias

Jeanette Iglesias

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