By Richard Chapo
The federal government wants their hunk of meat regardless of how you earn money. This is true even if you don’t think of it as working, such as when you are gambling.
To say that gambling is a big time money industry is a minor understatement. From playing the ponies to traveling to Las Vegas for a weekend, there is little doubt that a lot of cash changes hands. The IRS, however, views it as an even larger industry than you might think. While casinos and the horse track are obvious gambling niches, the IRS also includes lotteries and raffles in the mix. This effectively means many people who don’t view themselves as gamblers actually are. If you buy a lotto ticket every once in a while, the IRS considers you one.
If you gamble, you are responsible for reporting your earnings and paying taxes if you won more than you lost during the year. If you lost more than you won, you get to right off the winnings. Unfortunately, the IRS will not let you claim a loss from gambling. In short, the house always wins with the IRS being the house.
If you have gambling winnings, the tax process can a bit annoying. You must file the 1040 form for your taxes because it is the only one that allows for the reporting of earnings. You want to report the winnings on Line 21.
If you have losses, you can deduct them to the extent they cancel out your winnings. Unfortunately, you can only deduct them if you itemize. In this case, we are talking about line 27 of Schedule A.
Regardless of whether you won or lost, you must keep tax records of your gambling efforts. Much like proving business mileage, you need to maintain receipts regarding payouts and the money you spent. The records should include the time and place you did your gambling. As with most tax records, you should keep these for a minimum of three years.
Richard A. Chapo is with BusinessTaxRecovery.com - providing information on taxes.
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1 comment:
Or you can tell the IRS to kiss your ass and not report it.
In all honesty I would report anything significant. But there's no way they're getting a cut of the few K I make here and there. Call me bitter. :o)
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