What happens in Vegas may not necessarily stay in Vegas, especially if taxes have anything to do with it. Did you know that it is required of taxpayers to report all gambling winnings as income? Yes, it is true, taxpayers must be able to itemize deductions to claim gambling losses on their tax return.
Gambling income is considered to be any money gained from winnings from the lottery, horse racing, and casinos. It also includes cash and non-cash prizes. The fair market value of these non-cash prizes such as cars or trips, must be reported to the IRS. Also, the payer of these winnings may issue a Form W-2G, Certain Gambling Winnings, to winning taxpayers based on the type of gambling as well as the amount they have won. The payer also sends a copy of the form to the IRS, so it is extremely important that you report these earnings as the IRS will already have them on file. Additionally, taxpayers should get a Form W-2G if the payer withholds income tax from their winnings.
One may ask, “Well how would I even report my winnings when I file?” The answer to that question is pretty easy. You would simply report all gambling winnings as income and list it in the “Other Income” section of your tax return. This will still need to be done even if the taxpayer doesn’t provide a Form W-2G.
Taxpayers are also able to deduct gambling losses on Schedule A (Itemized Deductions), but should keep in mind that you cannot deduct gambling losses that exceed your winnings. As always, it is beneficial to keep records of gambling wins and losses. Gambling receipts, statements and tickets should be kept or written in a gambling log or diary.
So whether you’re in Las Vegas having the time of your life or enjoying good times with family and friends at a local casino, or even “lucked up” with your recent lottery ticket purchase, be sure to take advantage of this info to avoid any problems with the IRS when it’s time to file your taxes. As always, ExpressExtension is here to assist you with any tax extensions that you may need. Whether it is personal, business or for an organization, we provide you with extra time to file your taxes correctly to stay in good standing with the IRS. Be sure to visit our website at www.expressextension.com to find out more about how great of a resource we can be to you!