Sport tips from the IRS? you guess


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Do you like to roll the dice, play cards or do you bet on the ponies? Whichever way you play, one thing is clear: Gambling winnings are always taxable income in the eyes of the IRS. You might think that is all The IRS says about gambling. In fact, the IRS offers some tax tips for casual gamers.

1. Profits are income. Gambling income includes winnings from lotteries, sweepstakes, horse races and casinos. Cash gains are of course taxable. You have to report all Your gambling winnings as income on your tax return, regardless of whether you get an IRS Form W-2G.

2. Prizes in kind. But even if you don’t win any money, goods you receive are taxable. You must pay taxes on the fair market value of prizes and premiums you receive, such as: B. Cars or Travel.

3. Tax forms? If you win, you will be liable for tax regardless of whether you received tax forms from the casino or any other payer. Depending on the type of gambling you gamble, the size of your winnings and other factors, you are likely to get an IRS these days Form W-2G. Think of this like the Form 1099 that you received from your bank that shows the amount of interest you received. A copy will be sent to you and the IRS so you don’t forget to report it when you return.

4. Hold back? You will also receive a Form W-2G if the payer withholds tax from your winnings. Some gambling winnings are subject to 25% withholding tax. Generally, if your winnings are less than the stake amount greater than $ 5,000, a withhold is required if the winnings are from sweepstakes, betting pools, or lotteries. Winnings from other betting transactions are generally withheld if winnings are at least 300 times the stake amount. See Instructions for forms W-2G and 5754.

5. Where to report. If you are a casual gamer, you should report your winnings on the Other Income line on your 1040 Form.

6. Deduct losses. You can deduct your gambling losses in Appendix A of your Form 1040. All your individual prints go there. Remember, however, that your withdrawal is limited to the size of your winnings. You must report your winnings as income and claim your eligible losses separately. You cannot reduce your winnings by your losses and report the difference.

7. Keep records. You must keep accurate records of your gambling activities. For many players, this is the hardest rule to swallow, but the IRS is serious. Keep these items such as receipts, tickets, or other documents. You should also keep a journal or similar record of your activity. Your records should show your winnings separately from your losses.

Please see IRS for more information Publication 525, Taxable and Non-Taxable Income, and IRS Publication 529Other deductions. Even better, check out Tax issue 419, Income and expenses for gambling. Also check out this podcast on gambling wins and losses in English and Spanish.

You can reach me at … [email protected]. This discussion is not intended as legal advice and cannot be relied on for any purpose without the services of a qualified professional.