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Understanding United States Gambling Taxes

Understanding United States Gambling Taxes

In the United States, players are required to pay taxes on certain gambling wins. The exception is if a gambler is visiting from outside of the United States, in which case they must pay tax on slot machine wins over a certain amount but do not have to pay them on money won at a table game.

Everyone else is required to report their winnings to the U.S. government. Gamblers need to know that there are circumstances under which gambling losses can be deducted from their income tax. When deducting any gambling loss, players cannot deduct an amount higher than the amount they won.

Any gambling losses deducted from one’s taxes must have occurred within the current year. Gamblers cannot deduct money they lost before the current year began. It is also required that gamblers itemize anything they are claiming on their deduction. Gamblers who lost money but didn’t win any during the year don’t have to report it on their taxes.

When a gambler has lost more money than they have won that year they don’t have to pay taxes on them. However, they are required to give the IRS one report of their wins and one report of their losses rather than combining wins and losses into one report. Gamblers who won money and then lost it all are still required to report this to the IRS.

For those who gamble frequently, the IRS recommends keeping a session net result diary. In this diary gamblers write down every date they have played; how much they bet; which casino it was at and the type of game they pay. This allows gamblers to easily total their wins and losses at the end of the year, making the process of filing their taxes easier. Gamblers need to know that every day they play is considered one session, whether they played only once or multiple times that day.

Regular gamblers are advised to keep track of their own casino activities rather than relying on win/loss statements provided by the casino they gamble at. The reason for this is that the IRS frowns on using nothing but casino reports as they are often inaccurate and cannot be used for purposes of accounting.

Casinos provide the necessary tax forms to gamblers who win a prize of $1200 or more from a slot machine game. For horse racing, the amount is $600 and for Keno it is $1500. This applies to single wins only. Gamblers who win an accumulative $1200 from more than one game do not need tax forms as a result. Tax forms are also unnecessary if a gambler wins money on table games. The only exception is if a gambler either cashes out or purchases casino chips at a value of more than $10,000.

In the case of a United States professional gambler all losses are able to be deducted from taxes because these losses are always considered to be a business expense by the IRS.

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