Tax Advice for US Gamblers
Many people in America have bet on the Belmont Stakes, some will be lucky winners and others losers. However, whatever the outcome of the bet, it is essential to understand the way in which gambling winnings are taxed.The first thing to remember is that winnings are always taxed, whether they come from lotteries, raffles, horse or dog racing, or casinos. Furthermore, non-cash prizes, such as cars, are also taxed.
In the US gambling winnings are reported with a Form W-2G and at the end of each fiscal year total gambling winnings must be reported on line 21 of IRS Form 1040.
This means that gamblers can’t use the simpler forms as they don’t allow gambling winnings to be taken into consideration.
The good news is that gambling losses can be deducted on line 28 of Schedule A, Form 1040. However, losses that are greater than winnings can’t be deducted. Therefore it is important to keep accurate records of all winnings and losses. It can be necessary to provide receipts or tickets that show both winnings and losses, especially in order to deduct losses.
All big wins are reported to the IRS by casinos so keeping good records is essential, otherwise you can end up losing twice, at the tables and to the tax man.