Most individuals don’t consider taxes when driving to a casino, but what may seem to be nothing more than a chance to earn some extra income has tax consequences. Casino profits are frequently singled out for taxation by the federal and state governments.
If you’ve ever gambled in a casino, you may be shocked to learn that your winnings are taxed. There are winners and losers in gaming. Even winners, however, may become losers if they do not pay their taxes. The IRS considers any money you win gambling or wagering, as well as the fair market value of any object you win, to be taxable income. Gambling revenue includes not just profits from card games and casinos, but also from racetracks, game shows, lotteries, and perhaps even bingo. Gambling winnings are subject to specific regulations and stringent recordkeeping requirements.
Is Gambling Winnings Taxed?
Yes, but unlike income taxes, gambling taxes are not progressive, which is a benefit for large wins. Gambling winnings, slot machines online, are usually always taxed. This includes money as well as the fair market value of any prize you get. Gambling winners are required by law to disclose all of their winnings on their federal tax filings. You may get one or more Form, which details the amount of your wins and the amount of tax withheld, if any, depending on the amount of your winnings.
Money or rewards gained through gambling wins include, but are not limited to:
- Casino games
- Slot machines
- Keno
- Poker tournaments
- Lotteries
- Sweepstakes
- Raffles
- Betting pools
- Gameshows
- Horse or dog races
- Off-track betting
- Bingo
With certain conditions, wins from keno, bingo, as well as slot machines may not be subject to tax withholding. To prevent withholding, the payer of such prizes may be required to furnish a social security number.
The Consequences of Winning
The tax implications of gambling revenue and losses may differ considerably depending on whether the person gambles for fun or as a professional gambler. CPAs who may have clients with gambling revenue and losses must know how those clients participate in such activities and, in certain cases, whether they are subject to extra reporting and withholding requirements.
