I know that in the US you are supposed to report gambling winnings. When you do report gambling winnings however, are you supposed to prove it somehow? How will you know the exact amount of gambling winnings you've earned if you did not recieve a w-2g? Will there be a chance that if i report gambling winnings of 7500 and am not sure if there is more, that the IRS could audit me or penalize me in some way? and i am not deducting my losses.
2007-03-08 14:18:08 · 5 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
All of your winnings are considered taxable income, and you're supposed to be keeping track. (You should also be keeping track of ALL of your losses, including lottery tickets. You can deduct your losses from winnings until you reach zero for the year.)
You're basically on the honor system. I think the IRS expects you to always lose, since the house is always favored. Unless you get the paperwork, there's no paper trail on the winnings.
If you're a patriot, do the right thing and pay your taxes.
2007-03-08 21:24:59 · answer #1 · answered by Anonymous · 0⤊ 1⤋
Scott's answer isn't quite correct as to what your taxable winnings are. You don't subtract your gambling losses from your winnings and only report the difference. You report the entire amount of the winnings as income, and can only subtract the loss (up to the amount of the winnings) if you itemize, on schedule A.
And Annie's answer is based on what you might be able to get away with, not what is legal. And she too is confused about the deducting of losses.
If you're a serious gambler, the IRS expects you to keep records of your wins and losses, and report the total of the wins as taxable income. If you won $15 on a scratch-off ticket, nobody is going to care very much, although technically you are required to report even that amount as taxable income.
As to proof of winnings, on major wins at legal gambling places, you'll receive a w-2g and the win will be reported to the IRS. Smaller wins aren't reported by the establishment, although legally you are required to report them on your tax return.
2007-03-08 14:39:57 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
Certainly you risk the possibility that the IRS will audit your winnings. Report what you think is right, they would have to show otherwise. When you report your winnings, don't forget that they're only taxable to the extent that they exceed your losses. If you won a $25K jackpot, one Saturday, but have a nasty gambling addiction that caused you to lose $30K, you have a non-deductible loss of $5K. If you won $500 at bingo but only paid $ 50 to play and you didn't have any other gambling activity, you have gambling income of $450. Capiche?
2007-03-08 14:27:18 · answer #3 · answered by Scott K 7 · 1⤊ 2⤋
If you have had to give all of your personal information before you collected the winnings it is sent to the government for tax purposes. Those are the winnings that you HAVE to claim. You should keep track of those. Yes,if you don't claim all that was sent to the government there is a good chance that you will be audited and penalized. If not this year maybe next year. They don't care about your losses.
2007-03-08 14:44:14 · answer #4 · answered by unicornfarie1 6 · 0⤊ 1⤋
You need not report a win that is under $1,200.00 The casinos etc keep track of this and send a report to the IRS. If you pay the tax on the spot it will be reported as paid. If you have gambling losses that you think will match or exceed your winnings you can request a printout of your activity and owe the govt nothing.
To be clearer if you have a lot of smaller wins (each being under1,200) you owe no tax on these winnings and they are NOT reported. Example : If you win 20 jackpots of 600. you pay NO tax on these. I Hope i made my answer clear. I have lots of experience in this area.
2007-03-08 14:36:57 · answer #5 · answered by Annie 6 · 0⤊ 7⤋