So, what does gambling have in common with the Internal Revenue Service?
Very little except for the fact that your gambling winnings are fully taxable much like any money you’ve earned – and most of all, has to be reported on your income tax return.
But it’s not all bad news – you can even deduct your gambling losses but this will only be up to the extent of your winnings and no more.
Since responsible gambling now includes staying abreast of the IRS and its rules in regard to taxes for gamblers, here is a list of three gambling tips that will help keep the IRS off your back:
#1: No matter what you win, be it cars, trips or anything else other than cold hard cash, it will be taxed in the same way when you win cash.
#2: In the instance when the casino gives you a good amount of your gambling winnings, it is wise to obtain a Form W-2G from the casino as it is mandatory for them to issue you one and more so in the case of a big jackpot.
#3: Every gambler wins and loses money and when it comes to reporting it, you have to report both of them separately. Remember to report your gambling winnings on the ‘Other income’ line of Form 1040, U.S Federal Income Tax Return while losses will fall under Schedule A, Itemized Deductions and ‘Other Miscellanous Deductions’. Please also keep in mind that you cannot deduct the losses from the winnings and report them the remaining amount.