Do not even think for a second that if you won a substantial amount of money while you are on vacation in Las Vegas or Atlantic City that the Internal Revenue Services will not take some part of your winnings as taxes.
Gaming winnings are taxable and must be stated in your income tax return. On August 8th, 2007 Ralph Havens, the Director of Professional Services for JK Harris and Company, the country's biggest tax resolution company said that players are usually issued a W-2G by the casino, racing track, etc. if they win.
The IRS will check it out on your tax return stated under "Other Income". The Internal Revenue Services commented that the winnings from horse races, dog races, jai alai, lotteries, keno, bingo and other gaming activities need to be stated in your tax returns.
The amount of money that is needed to be reported to IRS are: first, $600 or more from gaming winning and the prize money is 300 times greater than the initial bet, second, $1,200 or more in gaming winnings from bingo or slot machines, third, $1,500 or more winnings from keno and fourth, $5,000 or more winnings from sweepstakes, betting pools and lotteries.
But the good thing about this is that your losses at the gaming table can also be written on the tax return. Players only need to write it in their tax return and attached a Schedule A for miscellaneous deduction. But there is still a limit on what gamblers can write down as gambling losses. Losses can only be deducted from the taxes that a gambler needed to pay if they win something.
Losses cannot be deducted if your winnings are not that substantial in your income tax returns. Havens commented that the biggest misconception of people is more losses than their winnings. Like if a person wins $5,000 but tries to write it off $10,000 in total losses as deduction, that, according to Havens will catch the attention of the IRS and they will immediately conduct an investigation.
A good rule to remember is players must fool proof their losses. But the question remains on how will players prove their gambling loses. Havens said that if you are currently in a casino and toy win some cash, you can immediately go to the casino's office and ask for a hard copy on how much you have wagered. The casino can usually tell from how much are the player's winnings and what game you were playing and how much you have bet.
Havens commented that players can carefully track how much they have lost by simply keeping the tickets from the races players wagered on. Haven also said that if you are a long time gambler and you can prove that you have at least wagered for 180 days a year, you cannot get back your expenses for your trips to the casino.
If you are a poker pro or a professional gamer, players need to file a Schedule C with their tax returns. Havens said that most of their customers that consult them for auditing help have different issues regarding gaming wins and losses.
[17-09]
Louis Blechdom
