The Smartest Way to Report Your Gambling Income

All gambling winnings are subject to taxation. There is nothing to do about that. You can read about the matter thoroughly at American Gambling.com.

If you win, here is an overview of all federal tax forms you will be required to fill out, so you can set aside whatever you owe the IRS. We recommend that you stay optimistic about the matter, because if you lose, there is a way to turn it to your tax benefit.

Your duty to report your gambling income varies according to the kind of game you were playing, the sum that you won, and the ratio of the winnings to the bet. When you nail more than $600 at a racetrack, get $1,200 playing slots or bingo, or are lucky enough to win $1,500 in Keno, you must give your social security number to the cashier so the IRS is informed about your additional income. No matter what, the IRS must always stay in the picture.

Don't try to outsmart the system, as if you don't give the cashier your social security number, he can deduct as much as 28% of your winning amount. If you cooperate and give your social security number when requested, the cashier will withhold only the 25% allocated to federal taxes.

In any case, the cashier responsible for payouts will give you a Form W-2G with a record of the amount you won and a section recording whether you paid any tax money on the spot.

Even if you don't win enough in a single win to be required to file W-2G, it is your responsibility to inform the authorities about your extra income. Don't rely blindly on the diligence of a casino agent.

You state your additional income- whether it’s gambling winnings or anything else- in Other Income, line 21 of the Form 1040. Eventually all of this money will be added to the total amount of your income.

There are some upsides to paying taxes on gambling. You can register your gambling losses as part of your total listed deductions. Go to Schedule A, line 27, Other Miscellaneous Deductions. You can contend that the income reported in your 1040 is reduced by the stated losses.

We advise you to state account for all losses, even small ones that you wouldn't ordinarily count, so that you'll get the highest possible deduction.

Technically speaking, you can keep an amount of $3000 without being taxed, contending that you lost the same amount due to unlucky wagers. However, it is still less than the common exemption of $4,850 permitted to a single taxpayer. If, by any chance, you happen to waste more than $4,850, then you can to fill out a Schedule A.

It is recommended to keep a record of all your claimed gaming losses. Although you don't have to submit any additional information regarding your losses with your tax return, it is wise to have it in order in case the IRS ever audits your claim.

We advise you to keep a log specifying all the details of when, where, and how much. Try to save losing lottery tickets or bingo cards as well.

Although you don't have to reach a certain amount in order to be allowed to deduct your gaming losses, they aren't, of course, unrestricted. If you wasted $100 on bingo cards and won only $75, consider the remaining $25 as the price you pay for gambling.

Related Issue: Gambling Comps