Money that gamblers win at a casino while playing bingo, slot machines, keno and state lottery alongside other gambling forms is considered as income and the law requires that the money is reported on one’s annual income tax returns. In the event where the winnings aren’t subjected to withholding, the winner is still expected under law to first disclose them and report to the tax man. Gamblers who pay tax can easily itemize their deductions and thus claim any losses suffered in gambling up to their winning amount.
Taxation rules on gambling income vary from one state to another as well as rules, requirements and regulations. For this reason, even as you research on federal law on gambling taxation you should visit the Department of Revenue in your state and know what you can possibly itemize or claim. Any gambling winning that is over $5, 000 is subjected to income taxation when a gambler wins them from a sweepstake, wagering pool, poker tournament, the lottery alongside other wagers where the win is more than 300 times your original bet. For example, assume that you played a $15 lottery and won $5000, your proceeds will be taxed for two reasons. First, this is because the winnings are over $5, 000 and secondly your winnings are over 300 times.
Taxation on gambling winnings isn’t just applied on cash but also on any other payout form. Gambling winnings paid in other forms rather than in monetary like winning a property during a gambling event will have their market value assessed fairy and you will pay the taxation liable. Fair market value as determined by the evaluators becomes your gain amount and you will pay the appropriate tax. However, most of the gambling winnings which are obtained from slot machines, keno or bingo are not subjected to withholding income taxation on federal level. In most cases, you are required to provider your own social security number and national identification to avoid taxes from being withheld. Failure to do this, you will be required that you pay an approximated tax amount.
Most of the states where operation of casinos is legal usually tax winnings as a source of state revenue. And in any case, this is the first reason why the casinos have been made legal in the first place so that the state government can raise more revenue from them to finance its operations. By the year end, you will be sent the W2- G for taxes withheld on the gambling winnings. Where tax hasn’t withheld and you still have some winnings you obtained through gambling, you will receive the 1099- MISC. in case your loss or win was obtained from an entity such as a casino, it is advisable that you ask for an income statement showing your winnings and loses for purposes of taxation. You are entitled to this statement every tax year regardless of where your wins or losses are reported. Failure to pay tax on winnings is considered a crime in most jurisdictions and you can be charged in a court of law.
