When you grab a big win at an online casino, it might be tempting to avoid declaring your winnings. However, you should be aware the IRS is watching.
Big wins are always an exciting moment. When the elation has died down, it’s time to start thinking straight. What do you need to do with your tax form? We’ve taken a closer look at the important aspects you need to be aware of when you enjoy success at an online casino.
When a Win Comes in
Aiming for a big win is pretty much what everyone is doing when you play online. Why bother playing if you don’t want to win. However, it’s something that has many strands that you might not be fully aware of. The main one concerns tax rules. Any winnings that you make when playing at an online casino, are taxable. This means that you have to declare them on your tax return at the end of the year.
Some people don’t do this, and they will attempt to avoid paying the taxes. However, this is something that you should be aware of. If you’re playing at a licensed US casino, then you will need to report your winnings to the IRS. As online casinos become more popular, this is something to keep your eye on. However, there are some caveats to this.
Firstly, wins on video slots and video poker aren’t reported to the IRS if they are below $1,200. It means that that burden lies with you in terms of reporting what you win.
Secondly, table games have a threshold of $600 when it comes to reporting winnings. It means that you will have to win a bigger amount on slots and video poker for it to be reported, compared to playing table games. This is mainly due to table games offering lower odds.
You should always remember that even if the online casino doesn’t report the winnings, you still have a responsibility to do so. All gambling winnings are taxable, not just the reported ones. Things also get a little bit more complex when offshore casinos are taken into account.
As sports betting has become more popular, it has turned into one of the most popular ways to use offshore gambling sites. Offshore sportsbooks and casinos aren’t a way to evade tax though. The IRS doesn’t care how people make their money, all they care about is getting their hands on the taxes. They don’t judge what you do, they just want their share.
This means that if you grab a win at an offshore casino, you will have to declare those winnings. Although any size of win will be ignored by the casino, and they won’t report anything, this does not let you off the hook. It’s important to make sure that you do declare your winnings, because if the IRS finds out, they will want the original tax paid, as well as a fine on top. In fact, depending on how severe the tax avoidance is, it can even lead to jail time.
Calculating Winnings
When you grab a big win, the main thing you need to understand is that you will need to declare that amount on your tax return. As long as you do that, then you won’t have to worry about getting in trouble at a later date. However, if you want to declare any losses, it’s not just a case of subtracting them from your winnings.
You will have to declare losses in your deductions section of your tax return. On top of this, they can only be declared if you have tracked them using receipts. This does make things a bit more complex, but if you have significant losses then this is well worth doing as it can decrease your taxable amount by quite a lot.
Professional gamblers have a much more complex tax schedule ahead of them. It’s best to employ an accountant or tax expert in this situation. Some will even set up a business to carry out their gambling activity. This makes it a more streamlined process, and they can then be paid a wage from the business which is much easier to track in terms of taxes.