You might have big dreams of hitting the big progressive slot machine jackpot in Las Vegas. Maybe you are a whiz at Texas Hold ‘Em and just know that it is only a matter of time until you make it to the final table of the World Series of Poker. Perhaps blackjack is your game and you are doubling down on your chances of taking your 21 winnings and retiring someday.
Wherever your gambling fame and fortune fantasies lie, it is a good idea to have at least a fundamental understanding of the tax consequences of your gambling wins and losses so that you not only properly report what is required by law, but also take full advantage of any opportunities to take tax deductions when allowed.
Taxable Winnings
Whether you win $20 playing bingo at your community center clubhouse or thousands betting the sports book at your local casino, your gambling winnings are considered taxable income and are supposed to be reported to the IRS.
Smaller amounts are hard to trace without a paper trail, and the truth is hardly anyone knows that they have to declare that money. Bigger wins from commercial gaming establishments, on the other hand, come with a paper trail. So if you had a particular good day betting the ponies, you had better let the IRS in on it, because they are going to find out one way or another.
In fact, racing tracks, casinos and other gambling businesses are required to report certain levels and types of winnings and even withhold taxes from them. Included in this requirement are:
- Slots or bingo wins that exceed $1,200
- Keno winnings of $1,500 or more
- Poker tournament winnings exceeding $5000
- Amounts that exceed $600 when the payout is 300 ties or more of the original bet
Deductible Losses
If you itemize your tax deductions you may be able to deduct some of your gambling losses. You should speak with a Virginia tax attorney about whether and how to deduct your losses as the rules can be confusing.
In general, you can deduct your amount of gambling losses up to the amount of your gambling winnings. So if you have a particular round of bad luck at the blackjack tables that far outweighs any amounts you have won, you are likely going to have to just live with the majority of your losses because you won’t be able to deduct them on your tax returns.
Keep Good Records
Good recordkeeping is key if you are the gambling sort. In the event you do win the World Series of Poker, you are going to be glad that you were able to offset that big payout with your losses.
Contact a Virginia Tax Attorney Today
Virginia tax attorney Kevin Thorn at Thorn Law Group can assist you with understanding how and when to report your gambling wins and losses on your tax returns. Give our office a call at 703-752-3752 or contact us online.
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