Most people who go to a casino do not know that their winnings could affect their taxes. However, gamblers can face serious penalties for not reporting their winnings on their tax returns.
Taxpayers in the United States must report all gambling winnings on their tax returns. According to Investopedia, taxpayers must report the winnings from the following activities:
- Casinos games and slot machines
- Powerball, lotteries, raffles and sweepstakes
- Sports betting and animal races
- Card games, bingo and game shows
How you report your winnings will depend on the dollar amount. The government applies a standard 25 percent tax on gambling winnings. However, if you receive over $5,000 in winnings from a poker tournament, lottery or sweepstakes, you will have to report the winnings on your income tax return. Additionally, taxpayers will need to report winnings of more than $600 or 300 times your original bet at a horse race, $1,200 or more from slot machines and bingo, as well as $1,500 in winnings from keno as income earnings.
While taxpayers need to report all their gambling winnings–even a $3 ticket– winnings are also tax deductible. To claim deductions, you must have proof of all your winnings and losses. To do this, you should save all your payment slips, tickets, receipts and other gambling-related documents to claim your deductions. Taxpayers can only deduct as much in losses as they report in winnings.
Spring is quickly approaching, and tax returns will soon be due. If you have any questions about reporting your gambling winnings or any other tax questions, consult with an experienced tax attorney to make sure you are complying with the laws in your state.