Gambling winnings are considered as a profit and in many countries all around the world they are taxable, so you need to fill a report for them. It’s your obligation to do that, especially if your country requires doing that. But, probably now you are asking if you need to do that with the losses? In most cases, you will have to do that, since losses are considered as deductions, but that won’t reduce the tax amount.
So, the general recommendation is to track down all the winnings and losses, so you can turn them into profit or deduction. In order to do that, you have to start a record for every separate action and include the day when you played, which games, the address of the casino or its website (if online), how many people were with you, and how much money did you win or lose. Keep your wagering tickets and vouchers, and also the receipts, and ask which document forms you need to fill up to report these things.
Keep in mind that this is only for gambling losses and other expenses that are related to your regular visits to traditional or online casinos like starwarscasinos.com. One of the most important things to know about reporting your gambling activity is that you can’t subtract the losses from winnings, so you can report only the difference. They are different, and you have to report them both, so you can get an exact calculation on your taxes.
If you didn’t know this until now, try to research your gambling history so you can fill the report properly and avoid law issues due to that. There is no way to skip paying the taxes, no matter how small were winnings and losses. Also, keep in mind that the investment in gambling is also taxable. For example, if you bet with $10 and you got $300, that means you need to report $300, not only $290, because, as we said, the additional expenses that lead to winning or loss are also taxable.
Itemize the deductions
The standard deduction is what you know as a definition of it. But, many will suggest itemizing them, and that means keeping track of your annual deductible expenses. So, you need to keep all the needed documents, bank receipts, bills, letters, and everything that proves you spent money on expenses like medical bills or donations. Sometimes, it’s good to hire a professional to explain all these things to you and show you how they are done, because it can be pretty difficult if you do it for the first time. For example, living in a declared disaster area is also a way to itemize some part of the deductions, because you needed to spend more money than usual to fix the things around you. So, now you see where we are getting – this is the part where you need to include the gambling losses in the tax file, so you can show how responsible a citizen you are.
How to keep a record of your winnings and losses?
The best way to do that is to run a journal diary every time you gamble. When you get back home, open the journal, write down the date, the games and activities, the address or the name of the casino (or their web address), how many people were there, who was with you, and how much money did you win or lose that day. Keeping track of that will help you not to miss anything important when filling up the tax form.
Also, it’s very important too to report if you are a professional gambler or an amateur. There are some differences in the way you need to file the taxes. For the amateurs, it’s an additional income to their general income, but for professionals, it’s considered as a profit from their business.
In the USA, amateurs need to report a Form 1040 Schedule A file and include the winnings and deductions. But, professionals, have to fill up the Schedule C form, to report it as a profit or loss.
How to understand what’s happening?
Gambling is a game of luck, and you can’t change a lot with that. Every country has different regulations on these activities, and the best thing you can do is to inform yourself how these things go. It’s not just simple playing cards or rolling dices, no matter if you are doing it online or you visit a facility. Every dollar you earn is taxable, and there are a few exceptions – but gambling winnings and losses are not a part of that. Even if you aren’t a resident of the country where you won, there is a special file you need to fill up and report, and that will happen at the moment when you finish your adventure at that particular place.
But, keep in mind that in most of the countries outside the USA the tax deduction is taken away from the payout, and you don’t have any further obligation there – but you still have it in the USA. So, inform yourself about how to report them, especially if you play the lottery, poker, slots, betting on races, and any other casino game.
Anyway, you have to check if the income is tax-free or taxable, so you can be sure you are doing things right.
Our final words
There is nothing in the world that comes for free, especially this easy money. Be responsible with your law obligations, because it may be considered a crime if you fail to report the taxes on these gains.
Also, if you are sure you want to gamble, do that with a lot of styles, keeping an eye on your bankroll, and managing the money you have. That’s the only way to protect yourself from big losses. Don’t forget to fill up the tax file too. You don’t want to be a part of the grey economy in your country, and you need to be transparent – it’s for your own benefit.