Know about Gambling Industries
The entire gambling industries in America are booming rapidly. New casinos and sports betting parlors are popping up increasingly all across the country. Las Vegas is thriving as always, and online gambling is getting bigger day by day. There are plenty of opportunities to plunk down a ‘bet’ if you enjoy gambling now and then. That being said, you might want to know about the tax implications of gambling. In this article, we are going to discuss whether gambling benefits or losses are taxable. Let’s get started.
Itemized Deduction in Gambling Industries
The IRS (Internal Revenue Service) always allows you to list your annual gambling losses as an ‘itemized deduction’ on the Schedule A of your tax return. Therefore, to ensure that if you happened to have lost as much as, or more than, you happened to win during the year, then you definitely wouldn’t need to pay any tax on your entire winnings. Also, keep in mind that even if you lost more than you won, then you may only need to deduct as much as you won during the year. Nevertheless, you will not get a deduction at all for your losses at all if you do not itemize your deductions. This is just one of the ways as to how gambling industries are badly treated by the tax laws.
If you happen to be audited by the IRS then your losses will be allowed by them only if you can prove the amount of both your winnings as well as losses. You can easily do this by keeping very detailed records of all your wins and losses related to gambling during a particular year. Keep in mind, this is exactly where most gamblers happen to slip up. They end up failing to keep all adequate records or any records for that matter. If you happen to slip up as well, then you can very well end up owing taxes on gambling winnings, and report to the IRS even though your losses exceed them for the year.
Gambling winnings are taxable income, which is subject to both federal and state income taxes except for the seven states that have no income taxes. It makes no difference at all when it comes to how you earn your winnings. It could be at a casino, gambling website, at a church raffle, or even at a friendly neighborhood poker game. Keep in mind that it doesn’t make any difference when it comes to where you win.
If you happen to be like the vast majority of people who are just recreational gamblers, then always make sure to report all your gambling winnings on your tax return every single year. Please do not subtract your losses from your winnings and only report the leftover amount, if any. This is not what you are supposed to do at all. You are required to report every single penny you win in gambling industries even if your losses happen to exceed your winnings for the year.
This brings us to the end of our discussion on if gambling benefits or losses are taxable. Now, let us know how informative you found this article on the tax implications of gambling industries.