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With online casinos booming, people are nowadays more interested in playing games and betting. When they do so, they either win or lose. You must know that you need to tax your sports betting losses and winnings.
Winning money from betting is fun. People stay excited when they place bets and at the same time they earn financial rewards when they win. However, they don’t feel good when they have to pay taxes on the money earned, but this is how it works.
The amount won at sports betting is taxable and you should also report the amount every year, so that appropriate tax can be calculated on it. You yourself are responsible to keep track of the wins and losses that you incur on sports betting and then enter that amount when filing tax returns. Whether playing slots online or offline, taxing is important.
We discuss a few rules that will help you tax your gambling winnings.
Record Keeping
As mentioned, you will have to keep track of the amount that you win in sports betting, so that you can enter the entire amount while filing a return. Each record should be kept, irrespective of loses or wins. Also the records cannot be overstated and so the officials will then trust the details provided. Overstating the records can jeopardize your credibility and cost you heavily. The documentations made should also include the W-2G form that you have received in the given year.
However, even if you have played a casino game online, you will have to note down the amount that you have won, so that it becomes easy to keep a track. You can easily check the last won tab and note down your wins. When playing offline, keeping track is a bit difficult, but you will have to do it, to tax your income.
How Much Amount is to Be Paid As Taxes?
When a bettor wins while gambling, they are liable to pay Federal tax of 24%. In addition to it, they may also have to pay some state taxes on the winning incurred. State tax however depends on the state where they are located. In some instances, the amount of federal tax is deducted from the winning amount at the source itself, if the amount meets a threshold limit of a certain amount.
At times you may not receive a W-2G form or you don’t choose to cash a major sports bet ticket, you are then also responsible to report the correct amount that you have won through wagering.
As stated, the payment of state taxes depend on the state where to belong. Some may have imposed their taxes on gambling winnings, while some haven’t imposed any tax. Some states don’t have the provision of income tax and so don’t impose a tax in gambling as well. Such states include Florida, Alaska, Nevada, Washington, Texas, etc.
Conclusion
We have seen that reporting gambling winning is critical, but it is not certain how you can do it accurately. We advise you to always consult a professional in such matters. They give best advice about how and what to do when it comes to filing returns.
