The rise of online gaming means that there are many opportunities for enthusiasts to enjoy casino-like games as well as sports betting and other gambling activities. However, many of these sites are run and operated outside of the United States, even though Americans in Maryland and across the country have brought in substantial winnings from those sites. If you enjoy online gambling, you may wonder how to handle tax issues that could arise as a result.
The Foreign Account Tax Compliance Act can play a major role in how people who use foreign online gambling sites deal with their earnings. When people win at online gambling at a site hosted outside the country, they are considered to be the holders of a foreign bank account and their winnings held at the gambling site to be similar to funds stored in a foreign bank.
International gambling sites are required to provide the IRS with the names of American account holders. If they do not, they could be fined up to 30 percent of the income generated by these accounts. In addition, Americans also have to report overseas income when filing their own tax returns, and the failure to do so could lead to a substantial fine of $10,000. When people do not report significant winnings at online gambling sites housed outside the country, they could face charges of tax evasion. Many people become aware of how serious the issue can be when they receive notices from the IRS about online gambling income reporting.
If you receive this kind of notice from the IRS, it can be particularly important to work with a tax lawyer who can help you to protect yourself and make the right plans to handle income from online gambling. To learn more about how you could be affected by gambling taxes, visit our site for additional information.