Casinowhizz receives tons of letters from online casino players from around the world to our Inbox. We do put in an effort to reply to all of them. Unfortunately, we also miss a few due to the hustle and bustle of everyday work life. Such is the nature of the casino online business.
Be that as it may. This week’s letter is something completely different; it’s not about the usual casino games tips but tax on online gambling winnings. Yes, we know; it’s a very sensitive topic. When lady luck smiles on you, always inform Uncle Sam about his cut.
Mary from Arizona asked us if she must pay tax on her casino winnings. She said she received a nice payout on Cash Bandits 3 slot at one of our top USA casinos online. Well, as painful as this may sound the short answer is, yes.
When it comes to that time of the year again; paying your tax. The time has come to declare your casino winnings to Uncle Sam. The problem is most American players think just because an online casino has a license in an offshore region. They are not liable to pay tax on their gambling winnings. This is not the case; we strongly encourage you to report the money you’ve won at the casino to the IRS.
When must I pay tax on the money I’ve won at the online casino gambling site? If a player wins more than $1,200 on a single spin playing slots for real money. The player must report his or her winnings to the IRS. The IRS considers video poker, and video keno as slot machines. The player must provide a photo of his or her ID and social security number to complete the W-2G form.
Once you filled in the W-2G form you must submit it to the IRS. Casino players must only fill in the W-2G form. If they had winnings of $1,200 on a single spin and above. If you play slot machines at a casino in Las Vegas and you had a big win.
A slot attendant will issue you with the W-2G form. Another thing you must remember Mary, and we say this to the best of our understanding. When you play an online slot and the credit meter indicates accumulated winnings during regular play that’s more than $1,200. It’s not necessary to fill out the W-2G form.
Another thing that players should be aware of. It’s not the online casino’s job to notify you about your tax winnings; that’s your responsibility. If you play at a Vegas casino, winnings of $1,500 or more when you play live keno. Or, winnings of more than $5,000 in a poker tournament is taxable.
What happens if I don’t play casino games such as slots, video poker, or table games; must I still pay tax? If you won more than $600 or 300x your wager, you must report it to the IRS. If if you’re just a recreational play at a casino and it so happens you strike it big. You must always declare your winnings.
Mary, if you regularly play at your favorite US casino site. You must report your yearly gambling winnings on the IRS Form 1040. We’d like to point out that you should not use Form1040A or FORM10EZ. This rule applies irrespective of the win amount, or whether you received the W-2G form or not.
Another important thing some players do is that they deduct their gambling winnings from their losses. They then report whatever the difference is. Suffice it to say, you cannot do this. What you can do is you can report your gambling winnings separately from the money you’ve lost. In other words, report all your winnings as an income, and claim your losses as an itemized deduction. But, only up to the amount of the cash you won.
There is a bit of light at the end of the tunnel, so please stay with us. You can deduct your online gambling losses. On the condition, you itemize your deductions for the year on a Schedule A Form 1040. Most importantly, if your gambling losses exceed your winnings; you cannot deduct it from your winnings.
If you’re still not sure how the IRS taxes online casinos winnings. Publication 529 provides a comprehensive explanation of how income tax laws relate to gambling namely; Miscellaneous Deductions from the IRS. Visit a Certified Public Accountant concerning any tax issues that may sprout from your gambling wins.
It’s not often an online slots, or a casino game pays out big time and you win. And, when it finally does and you experienced a nice windfall. Nothing frustrates players more when they hear they must pay tax on their hard-earned winnings.
Whether you win money at an online casino or at a land casino; you must pay tax on the money you won. As the old saying goes “death and taxes”, or something along those lines.