Ok guys, it’s that uncomfortable and undesirable subject that none of us want to sit and discuss: TAXES! But guess what? Even though you do have to report your earnings, gambling prizes are tax deductible.
At Prism Casino, we want you to have the requirements handy and make this operation as fast and smooth as possible. I have collected official information from the IRS site regarding this transaction that many of us gamblers, need to keep handy and know it like a creed.
- Gambling winnings are fully taxable and must be reported on your tax return. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and also the fair market value of prizes such as cars and trips. For additional information, refer to Publication 525, Taxable and Nontaxable Income.
- A payer is required to issue you a Form W-2G (PDF), Certain Gambling Winnings, if you receive certain gambling winnings or if you have any gambling winnings subject to federal income tax withholding. All gambling winnings must be reported on your Form 1040(PDF), including winnings that are not subject to withholding. In addition, you may be required to pay an estimated tax on your gambling winnings. For information on withholding on gambling winnings, refer to Publication 505, Tax Withholding and Estimated Tax.
- You may deduct gambling losses only if you itemize deductions. However, the amount of losses you deduct may not be more than the amount of gambling income reported on your return.
- Claim your gambling losses on Form 1040, Schedule A (PDF), as a miscellaneous itemized deduction that is not subject to the 2% limit. A nonresident alien of the United States cannot deduct gambling losses on Schedule A of Form 1040NR (PDF).
- It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.
Non US Residents:
- If you are considered a nonresident alien of the United States for income tax purposes and you have to file a tax return, you must use Form 1040-NR. Refer to Publication 519, U.S. Tax Guide for Aliens, and Publication 901, U.S. Tax Treaties, for more information.
Now there’s no excuse for you not doing things right. Come on! It’s quite an easy transaction that doesn’t take a lot of your time. It’s a matter of writing it down in your agenda and sending the proper documentation on time.