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US Gambling Tax; A Myth to be Discerned

By: Shane W

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In United States, gambling is legal by law as it generates billions of dollars in the form of tax revenues. So its very to simple to infer that why every kind of winning including the basics like lotteries to more sophisticated gaming like craps, pokers, horse racing and sports betting are subject to tax liability.
Not only the cash winnings but also the non-cash winnings are also considered for US gambling tax, after all they are also a form of winning. These non-cash winnings such as vehicles or trips are also tax liable based on their current market value. If you are lucky enough to win a vehicle that would have a cost $30,000 at a dealer, that is the figure for calculation of US gambling tax to be opt upon you. Many people end up selling their non-cash winning items to pay the US gambling tax, yet they still end up with cash.
If you are a non-resident of United States, or a new in the field of gambling, you need to know the following US gambling tax implications:

• Many states and IRS, both tax the gambling winnings.
• Winnings from all forms of gambling are taxable and need to be declared as income on your U.S gambling tax return.
• All losses from all forms of gambling deductible under itemized deductions for frivolous players confined to the amount of winnings declared.
• Professional gamblers have with them filed as self-employed business using Schedule C.
• The value of comps received is also considered as gaming winnings and must be included in your total winnings, as it enables you to deduct gaming losses to offset the income from the comps.
• Losses and wins must be reported in the year they come about. Surplus losses cannot be carried back or forward to offset winnings in other years.
• Married couples intending to file a joint return should combine their winnings and losses, and report only a single figure for each.
• IRS has announced ‘Lumping’ deplorable. ‘Lumping’ refers to a practice of reporting one net win figure with no losses, or reporting nothing in case of net loss from gambling. Gamblers must report their winnings sessions separately from the total of their losing sessions.
IRS requires from gamblers to maintain a diary stating accurately their wins and losses and must contain the following information:
o Date and type of ante.
o The name of gaming concern.
o The address and location of the gaming concern.
o The amount(s) won or lost.
Besides the above information, IRS also requires from gamblers to keep with them in their diary the following information”
o W-2G’s.
o Wagering tickets.
o Canceled checks and bank withdrawals.
o Credit card records.
o Receipts (if any) provided by the gambling concerns.

Casinos and card rooms are objectionable under ‘money laundering laws’ and any cash transaction of @10,000 or more must be reported to IRS in any one day. To evade any deviousness, they can also make report for amounts as low as $2,000.
W2-Gs forms are not needed for winnings from table games like craps, pai gow, blackjack, roulette and baccarat regardless of the amount.

Article Source: http://depositarticles.com/

“US gambling tax applies on all gambling winnings by IRS and international tax treaties. However non-US gamblers have rebate for these US gambling tax as it applies to US residents only”

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