Gambling is highly popular with players across the world. It’s grown into one of the biggest global industries, partly due to the popularity of the internet. However, something that a lot of people don’t understand, is that gambling winnings still have to be declared on tax returns. Despite this, not everyone knows what you can do about gambling losses.
Gambling in the Modern Era
Modern gambling generally tends to take place on the internet. There are so many different online casinos on the market, that players have more choices than ever before. It’s because of this, that players tend to use review hubs, such as to help them choose the best site to play at. This makes it simple for players to discover which sites are more reputable than others. The reason for this is that there are lots of reviews that provide all of the important information that’s needed in relation to online casinos.
As more players play at these sites, it’s important to be fully informed about what you need to know when paying your taxes. As the a lot more revenue from online gambling than ever before, it’s very important that players are aware of what they have to do when using the sites. Fortunately, we have gone over the most vital details that you need to know.
Declare your Winnings
To put it very simply, winners at online casinos and sportsbooks have to declare their winnings on their tax returns. This is the case, even if the winnings took place on an illegal offshore site. The IRS doesn’t care about how you made the money, they just want their cut. It’s the same across the globe with in different ways.
In the US, players have to declare their winnings on their tax return, and then pay the relevant amount of tax. What’s important about this, is that if you’re playing at a US-regulated casino, your winnings will be automatically reported to the IRS.
It depends on how much you have won as to when the winnings are reported. With some games, the threshold begins at $1,200, while for others it begins at $600. This means that it’s important to look at the different thresholds before playing, so you understand what is going to be reported, and what is likely to be left out.
With these winnings being reported, many people aren’t aware of how they should approach their losses. Unfortunately, it’s not quite as simple as just saying you lost this much. There’s a little bit more to it than that.
Reporting Losses
Many people don’t fully understand the way to declare gambling losses. Unlike winnings which can easily be declared, losses take a little bit more work to be put through. This is, because, like most tax systems, the government likes to make it easy to take your money, and then make it more difficult to give it back.
If you have over the year, then you can declare them on your tax return. However, they need to be in your deductibles. On top of this, you also need to make sure that you have full receipts for all losses that you have incurred.
It means that you need to document all your losses over the course of the year so that you’re able to back up what your losses are. The reason for this does make sense, as it’s a lot to try and decrease your tax bill than it is to make the size of your winnings smaller. This does in turn, make it slightly difficult for people who operate as professional gamblers.
What Should Pro Gamblers do?
Pro gamblers have to approach things in a different manner. As their losses would essentially account for their expenses, it’s normally best for them to set up as a company or business, rather than putting their gambling balance sheet through as a personal tax return.
This means that the pro gambler would then pay themselves a salary through the business, which makes putting through a personal tax return a lot simpler. Obviously, it doesn’t make the business taxes any easier, but it does remove some of the personal liability in place with personal taxes.
On top of this, pro gamblers could also employ an accountant to operate their business taxes. This would ensure that all losses would be documented correctly, and from there, it would be much easier to legally and correctly declare losses as deductibles.
As such it makes sense that when running a business pro gamblers would keep receipts for their losses. It means that they will then be able to significantly lower the amount of taxes that they have to pay. On top of this, additional expenses that arise from gambling can also be included in the tax return.
For example, a trip to Vegas for a normal person would not count as expenses on a tax return. For a pro gambler a trip to Vegas would be a work trip and they would then be able to include anything that they spend while there are expenses. This allows pro gamblers some additional leverage when it comes to filing their taxes. They will be able to legally include costs that will give them a lower tax bill to pay.
Even in countries where gambling winnings don’t have to be declared on a tax return, a pro gambler would still have to do so. This is because if it was their job then it would count as their income. Because of this, for anyone who wants to be a pro gambler it’s important to work out how to file taxes correctly.