Gambling taxes: How much do you owe to the government?
Many people spend time and money at the casino. One of the overlooked factors is the amount of tax you will owe the government if you win a sum of money. There could be penalties if you fail to report your winnings and pay the taxes on the amount won during your winning spree. One of the factors to take into consideration is the fact that gambling tax is different to other taxes that may work on a balance of scales. Usually the gambling institution has to withhold 25 percent of the amount.
When should you report to the government?
The amount does not matter. For example, if you win $30 at the casino, then you should report it to the government. You may not owe tax on the amount as the institution will usually deduct it.
What must you report to the IRS?
Any amount that is above $500 and above must be reported. Your total income tax will typically comprise of gambling income and the income you derive from your career.
What do you have to do when you win?
You have to fill in the W2-G form which can be found on the IRS website. Most gambling institutions like casinos will provide you with this form.
What about gambling losses?
Taxes owed on winnings can in some cases be off-set with any losses that you incurred in that fiscal year. However if you win $20,000 at the casino and lost $70,000 as a result of gambling. Your deduction will be limited to $20,000. The purpose of this rule is to prevent individuals from using gambling as a means to claim higher deductions and off-set their taxes that is owed to the government.
Remember to take your social security information with you. If you do not have this information with you when you win, you will owe 28 percent in gambling tax instead of the usual 25 percent.