Picture this: you`re entering a casino and determined to win. You are sure of your future financial success. Then the most unbelievable thing happens, and you win a tremendous sum of money. Even though this beautiful image is in your head, you need to think about what you would do with so much cash. Would you sail around the world on your own yacht or would you buy a house in Beverly Hills? On the other hand, are you the kind of person that would give all that money to charity?
None of this is correct because you`ve forgotten to ask yourself the most significant question: “Are casino winnings taxable? Unfortunately, they are. In case you didn’t know it, you are required to pay a substantial amount in taxes when you are lucky enough to be a winner at any gambling game. These government taxes may drive you crazy, however, let us be your guides, and together, we’ll figure it all out. Oh, it should be mentioned, this article will be especially useful for our American audience because gambling taxes exist in the USA and Las Vegas is located there, so it all makes sense. Wait a minute, don’t all countries tax casino winnings? Nope, and we`ve got all the details.
Little sums of gambling money don`t fall under a system of taxation so if you bet a couple of bucks on slot machines and won yourself a sufficient amount of money to order a double pizza, you have nothing to worry about, as there are no taxable winnings per se. The whole issue with gambling taxation in America is that the government perceives your casino winnings as income and naturally, you need to give up a part of your good luck earnings to the state. However, how much is that exactly?
It’s fixed at 25% of your overall jackpot or whatever game it is at which you won. If it sounds like theft, that is because it is! However, it has a reverse effect in the form of your loss of tax deductions, but we’ll tell you about that later. What is the sum of a win that is large enough to require you to give up a quarter of it? It depends on the type of gambling activity. The most significant opportunities to keep your well-earned money is by playing poker. If you won less than $5000, you could keep it all to yourself.
If you were winning at keno, then you would be required to pay taxes on as little as $1,500. With slots machines and bingo, you are taxed on $1,200. If you bet on horses in a horse race, you are taxed on as little as only $600. However, there are many more details and specific features of horse race gambling so be careful and read all guidelines correctly. The good news is that this gambling tax isn’t progressive and its percentage won’t rise when you win more money. You`ll still have to give up a lot though.
You`ll just have to pay another kind of ridiculous gambling taxes. Okay, maybe they are not that bad, and we’re biased, but still, professional gamblers don`t have to report their winnings in a way that all other casino customers do. Taking into consideration that professional gambling means more or less stable income, players still have to pay federal taxes but as all working people in the USA do. Paying the same type of taxes is a nice loophole, and many of you probably already started thinking about becoming a total pro. However, you’d better think twice because there are way too many risks in this profession and you just never know when you will get your hands on your next salary or whether you`ll get paid at all.
As we`ve already stated, the American law has some opportunities to deduct the taxes from your winnings in the case that you lost big at a casino. Before we tell you how to do that, let’s find out what the IRS is and how it works. Okay, many of you must know that this organization is an Internal Revenue Service, and you have to report to it specific information about your income. You need to keep track of all your winnings and losses to keep it all in order and save money on taxes. Write all sums of money down, keep the receipts from gaming facilities, wagering tickets, credit records, and all documents that are somewhat related to your gambling activities.
Also, you need to write down addresses of casinos, names of managers, dealers, and your fellow players (when it`s poker) if it’s possible. A date and maybe even time are also necessary. Use a Form W-2G. So here’s the deal. You can’t file for losses as a tax deduction if you have no winnings.
What is more, the sum of the deduction can`t go beyond the total of your winnings. For instance, if you won $7000 (congrats on that), but you lost $9000 (and that’s a real bummer), your taxes may only be deducted by $7000. This scheme only works in the case when winnings and losses match, and it only allows you to reduce taxes on income gambling.
Let’s say you want to have the time of your life and test your luck playing some poker or slots, but you have no intention and desire to share your good luck with that wonderful state of yours. No problem, you can just go to Europe, Australia or Canada to get involved in a tax-free gambling adventure! You can kill two birds with one stone this way (though we think that this idiom is quite violent). Get yourself a memorable Euro-trip and engage in fun, entertaining (and sometimes profitable) gambling sessions.
Just in case you need a list of these EU countries, here is the list: Austria, Belgium, Bulgaria, Czech Republic, Denmark, Finland, Germany, Hungary, Italy, Luxembourg, Malta, Romania, Sweden, and United Kingdom. It seems Queen Elizabeth II likes poker herself because everywhere in the Commonwealth you won’t have to give up your casino winnings. Assuming that you’d want to get involved in a foreign gambling adventure, we wish you a safe and pleasant trip!
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