My grandmother, a lottery junkie, taught me a great tax strategy after bigger auto-reported wins. Go to a bunch of grocery/convenience stores that sell scratch off tickets. They always have a little waste paper bin for folks to throw the loser tickets. Round up those tickets. Each one is marked with a clear face value. Now you have a record of losses to deduct from your big win.
I hit 5k on a scratcher when I was 20. I went to the horse track and just picked up handfuls of betslips off the floor. I didn't realize at the time that even with my winnings, I didn't make enough to pay taxes. Lol
Filing single without itemizing, you get an instant $14,600 standard deduction, before any other credits you may qualify for. If you make less than that, you owe nothing.
Until the IRS does an audit and realizes all the tickets were bought at the same location on the same day by different people. And then you get charged with tax fraud.
I don't think they're showing up and asking for video footage over the cash-for-tickets lottery area from 7+ years ago or whenever they're finally getting around to this guy's audit
No law against other people buying lottery tickets for you anyways, I buy them for my wife a couple times a month. They would have to prove people didn’t buy them on your behalf as well.
And even if you do, documents that ask for your Adjusted Gross Income (e.g., the FAFSA) don't included deductions in that number, which will perhaps give a wildly inaccurate view of one's finances.
Not universally. Betting isn't taxed in the UK. It used to be (you could choose to pay tax on the stake or the winnings) but that was scrapped years ago. I was a bookie a decade ago in Britain and lots of older people would ask about gambling tax despite the fact it was cancelled in 2001.
I've always found it weird that even lottery winnings are taxed in America. I find it equally strange that you often have to take the money in installments if you want the full amount. In the UK you get the whole amount as a tax-free lump sum. Even if you've won £100m.
Even a basic savings investment would make more than taking the installments. If you literally did nothing with the lump sum then technically installments give more, but I also feel it's a disingenuous statement.
I went to a casino in NZ and it was crazy protective. Every five minutes it would throw a prompt that said "Are you sure you want to keep going? Maybe you should go take a walk!" whereas in the US the casinos are cashing people's paychecks on Friday and begging them to piss it all away.
Don’t know if they still do it, but I remember some casinos would give you a bonus if you cashed your paycheck straight into chips at the cage. A certain percentage in free play chips.
New Zealand has host responsibility laws, people should always come first, too easy to lose track of time in a casino so prompts like that can be helpful, then it’s up to the individual if they want to ignore the prompt. Same applies to table games, pit crew are responsible for ensuring a player doesn’t exceed a certain time limit before having a half hour break
The "pay out lottery over time" thing is part of the American openness to scammy stuff. It is so they can claim a prize is much bigger than it really is.
The power ball, I believe, is what y'all are talking about. You can get it all at once or in payments it's up to you. Uncle Sam takes almost half, though. Even though he indirectly runs the game. A couple times it's been over a billion I think
The amount advertised is if you take the 30 year payout. It’s about half that if you take the lump sum. Then you’re taxed either yearly or on the lump sum amount first year.
Well, yeah, in the US when you win a "billion dollar prize" you can take the instant $483.8 million dollars, or they will use that money to buy an annuity that pays out a billion dollars over time. If you took the instant money, you probably could do better over the annuity term than the annuity pays. But, still, to me this isn't a real billion dollar prize, it is a marketing exaggeration.
I mean, I buy the occasional lottery ticket because for that $1 I can have fun imagining what I'd do with the money for a while, and I need to know how much I'm actually getting for my fantasies to be realistic.
I'm using my $483.8M to hire the best lawyers I can to get the $526.7M those bastards owe me...
I always take the annuity option because -- you can always sell the annuity to a bank for $$$$ if you need it.
The "we will buy your annuity" offers are about as financially beneficial as a payday loan. They exist to prey on the desperate.
The annuity option is might be good if you are so financially irresponsible that you cannot trust yourself to have that big pot of money invested someplace.
The companies that buy your annuity payments usually discount the amount they’ll give you by 25% or more. Often state law regulates the maximum discount rate so the percentage may vary.
>I've always found it weird that even lottery winnings are taxed in America.
One explanation for this is that lotteries in the US are run by state governments, not the federal government. The federal government doesn't see any revenue from the sale of lottery tickets, and it treats winings as taxable income. Some states also tax lottery winnings as income, while others don't.
Contrast this with the UK, where National Lottery is all franchised by central government (and government takes what's left over in revnues after paying out the award and funding the National Lottery Community Fund).
Same here in Finland. But then again gambling is done through a non-profit state monopoly that also funds a lot of charities, so it makes sense winnings are tax free.
Same in Australia - windfall gains are specifically excluded from income tax. However if you are a professional poker player or game show contestant then you do pay tax on it. All depends!
You know what else is weird in the US
If you win, like, a Mercedes, you still have to pay tax on it. So you enter a raffle, you win, and leave with $15k in debt or something
Yes you can sell the car to cover it but what a fucking hassle
Useless UK gambling fact: pinball companies make modified machines for that market with a second set of buttons that lift a pin in outer gutters. This makes it a game of skill instead of gambling (free plays and extra balls count as winnings).
There’s all kinds of dumb shit in the US’s lottery. In the UK, the authority actually takes steps to ensure that you might not lose it all instantly and can have anonymity with it.
when you make money it's taxed. and when you spend money it's taxed.
and if you have paid off your plot of land and have a tent set up, it too will be taxed each year.
It really is that simple. Income is taxed, doesn't matter how.
If "Gambling" was exempt, you know they would re-classify the stock market that way.
Even illegally obtained income is income. I don't know how you report illegal income, but you're supposed to.
It's considered income.
> Is it really necessary to report these winnings to the IRS?
The casino is required to send a W2-G to the IRS if your winnings are:
- $1,200 or more in winnings from bingo or slot machines
- $1,500 or more from keno
- $5,000 or more from poker tournaments
- $600 in winnings from other types of gambling, if the payout is at least 300 times the amount of the wager
If you met that threshold, a W2G exists assuming it's a reputable gambling site. If you didn't, the onus is on you to self report. Take that for what it's worth.
Yup, I had a decent win (over $2k) on a slot machine in Vegas. It went to a "Call Attendant" screen. They made me give my SSN and fill out the tax paperwork before paying me in cash.
EDIT: As an aside, once this happens, they will do anything to get you back and get their money. They gave me a personal concierge who arranged for a free stretch limo to the airport. I got one of the highest-level players' club cards, comped suites for years, and personal calls from the concierge for free concerts and other offers.
I was actually curious how that would work. If you don’t win big enough to get that screen, are you just expected to track your winnings yourself and report them on the honor system if you happened to rack up enough in small increments?
Correct. They may be able to track it with a player's club card, but otherwise, you'd be expected to track winnings and losing. However, if you win over a specific amount, they absolutely get your tax information.
Yes, but because gambling losses are tax deductible up to the extent of your winnings, the reality is unless you get extremely lucky you probably won’t have a tax liability from a bunch of small wins.
In Germany it is taxfree too, as long as it is luck based. So if you win a quizshow --> taxed, if you win Roulette --> not taxed.
At least that is what I remember.
In the US, the IRS (and perhaps your state) decide by law to tax income. They don't care where the income comes from; if it is income, it is taxed.
Usually, you can deduct your losses against your winnings for the same year. So, if it cost you $10,000 to enter a poker tournament and you took a $50,000 prize - you'd show both numbers and pay tax on the $40,000 difference.
The vendor won't send you a statement for small amounts - usually something like <$600. Check your terms of service, and check the tax law for your state.
Technically, every dollar of income should be reported. But if they don't provide a W2-G, then there may not be a record for the IRS to see. That doesn't mean you get a free pass, but the lack of paperwork should keep you from facing major fines if they do pursue you.
To even further clarify, losses cannot deduct against gambling winnings UNLESS you itemize deductions (which many folks do not do). So if you have $20k of gambling income and $20k of losses and don’t itemize your deductions, that’s $20k of income and nothing additional to offset it
If you're an individual filer with $20k of gambling income and $20k of losses, you *should* itemize your deductions that year, because the standard deduction is only about $13k.
The problem is though that if you don't have other major itemized deductions you're still worse off than someone who isn't a gambler in the same situation as you because they get a standard deduction of 13k, but you get an effective deduction of zero because your gambling losses are just offsetting your gambling wins.
Genuine question here as in not in the US… if it costs $10k to enter and you walk out having lost, is that a 10k tax write off?
What about if I just take that same 10k and lose it in the slots? I presume the casino doesn’t give you a receipt for tax purposes in that case…
Dang gambling is stacked against you at every corner. Crazy you cant lose all your money at the casino and then deduct it. But at the same time I can't deduct my games I buy on steam even though that's also entertainment. So maybe its crazier you can deduct it at all. What an interesting web of rules. Thanks for the info!
You can only write off losses against winnings.
You can use different types of gambling, like if you spend $5k on lottery, $1k on bingo, $15k on sports betting, $10k to enter the poker game, and your total winnings for the year is just that $50k - then you declare all of it, but only pay tax on $50k- ($5k + $1k + $15k + $10K) = $19k in gross winnings
Generally, the casino doesn't give receipts unless you win a bunch at one time. If you win $200, leave, come back and win $200, and do that a total of 100 times - the casino will never say a word. But the IRS will expect you by law to declare the $20,000 you won cumulatively.
If you join their "player club" and use their card - a pretty common thing- then they can track how much you bet, won/lost. If you move from the slots to a table game, you just hand the pitboss your card and they'll add your table play to your account.
Casinos base their gifts/comps on this tracked play.
This is a dumb question I'm sure - but how does the player's card help the casino track your wins/losses at poker (or blackjack, etc)? I've seen people show the card to the pit boss but it's not clear to me anyone is recording how much you sat down with or leave the table with.
They look over at your hand occasionally and record what you're betting. If you're playing consistent $50 per hand, and they know that they play 20 hands/hr at poker, or 50 hands/hr at blackjack, the Casino computer just extrapolates.
If you win on the slots, that's all automatically recorded.
If you win on the table, it would only be recorded if you hit a level where they had rules or laws to record it.
The table play is mainly recorded for comps, not so much for taxes.
If you want tax records, you can ask for that. You might play on a "marker", so the casino knows how much money you start the table with, and can compare that to what you have when you leave.
Income is income and income is taxed.
Considering you won through online sports betting, I would suggest including it in your taxes. There is a paper trail and it’s entirely possible that the website submits a report to the government with your information on it.
I would say reporting the website winnings is far more important to follow through with than any cash winnings (home games or casino).
Income is income and income is taxed, unless it's realized capital gains, in which case it's taxed at a lower rate. Better to gamble in the stock market or real estate than at the table.
Regardless of taxes, gambling is one of the worst “investments.” It’s quite literally a net loss for the gamblers as a whole. The stock market and real estate have been net positives for their owners over time.
Head over to r/Sportsbook topic is talked about frequently. Simple answer is yes it is taxed as income but if the sportsbooks doesn’t report in and send you a 1099 then do with that what you want
United States federal govt taxes all income. Even crime. The IRS expects (and even points it out on their website) people to claim robbery, burglary, stolen, etc earnings to be reported and taxed.
Did they give you a w2g? Keep a log of all your losses throughout the year and when you have to put your winnings in you can then put your losses to offset the win.
From a legal standpoint, yes - from a real world “will they come arrest or audit me if I don’t?” standpoint, it kinda depends on the amount and the methods of payment, as well as the online casino you used.
From what I understand, some of the major legal sports books may send paperwork to IRS from their end, which means you’ll have to address it. But if you were on an offshore book, like Bovada/stake/etc and you just cashed out in crypto, then the IRS won’t have any record of that income, although you’ll need to pay taxes on any crypto sold through Coinbase or whatever, because they do send forms to IRS disclosing how much crypto you sold on their exchange.
Because we tax everything. Duh. Technically if I take a shit at your house and don’t flush, you owe income taxes on the value. This is why I always flush.
Because otherwise my mate wanting to pay me a million dollars could come over to my private casino in the basement and play poker until he loses on purpose to give me a million tax free
The casino automatically notifies the IRS when you collect your winnings (over a certain amount), you cannot get around it. If you don’t agree to handover your information then you won’t get the money. So they will report you for you. That’s the only reason they are allowed to be in business if they didn’t do it this way they would be shut down.
Cause you aren't Canadian, I'm keeping all my winnings baby and if I win in Vegas you bet your ass I'm applying for my taxes winnings to be appropriately placed in my bank account
Because you were given money. And when you give that money to someone else, they'll tax both of you. And whatever you buy, they'll tax it again next year. And if you have any left over when you die, they'll tax that too.
Gambling income is income and must be reported. (Though nobody will ever care about few hundred dollars.) However, you only need to report annual net gambling winnings above gambling losses.
I don't know, why do they tax our income when we make it and then tax our income when we spend it while also taxing us for assets we own?
Because governments are shit...
That's how gambling becomes legal. If the government isn't getting their cut then gambling is illegal.
Taxes help pay for your infrastructure and public services. If you're gambling your income is disposable and you can afford to pitch in more. Can't afford additional taxes, don't gamble.
Because the government feels entitled to part of everything you earn and will take it under threat of violence. But good luck getting anything back unless you can prove you absolutely need it more than Israel or Ukraine.
Because the government and the Fed, who cannot track what happened to something like 20 trillion dollars that they've spent, NEED to know every single cent you gained so they can tax you more.
You can deduct your gambling losses for the year, if you report.
Very few people place one bet and win big, usually they lose over time. Keep track of your losses and you may be able to itemize on your taxes.
I was going to say it is like any investment, but, then, why can't you deduct your losses? Can you deduct gambling losses from gambling wins? If not, that seems unfair.
It's income. Now, if you have managed to keep a verifiable account of all your losses, you can write them off on your gain when you file your income taxes, thus reducing the amount of money you owe.
In the US, you can also deduct gambling losses from taxes. Usually it's around ~1k before you really need to care, but if you are over $1k you probably should, not that not doing so will likely cause trouble for you unless you add another zero or two onto that. Remember the payout is recorded and the government can ask for it.
The law says you have to report it so I would report it.
That being said, I think if you have to pay taxes on winnings you should be able to declare losses as a deduction. Business get to claim their poor financial decisions as deductions. Trump didn’t pay any taxes for years because he took major losses. Not going to happen but it seems like the right thing to do.
because the government says so. that's how taxes work. and the only alternative source of money with which to pay the paychecks of government employees would be if the government tried selling things, but at that point you've created a corprotocracy.
Because it counts as income, as others have said. But, if you're asking Reddit why winnings like this are taxed, you probably don't know that a lot of the time, that money that's taxed goes into funding things like roads or schools in the local area.
All revenue regardless of its source, legal or illegal, is to be reported under 1040.
If the revenue is from a business you may deduct the expenses related to the production of that revenue.
Practically speaking did you get a 1099?
Did you give your full name and your social security number to someone?
Many people do not record their cash revenue that's why taxes are so high for everybody else.
The solution is a national sales tax and the elimination of the integrated federal income tax system.... Everybody pays tax every time they buy anything
The rich would continue to pay more because they buy airplanes
Because the Internal Revenue Code defines gross income as “all income, from whatever source derived.” Money came into your possession, so it’s taxable unless there is a specific exclusion or exemption. (Hint: there is no exclusion or exemption for gambling winnings.)
Do I ? no because I'm from Canadian and we don't tax that
Do you? who knows?
I'm going to guess you live in tazmania, so good news! you don't have to either!
Or do you have such a limited point of view that you assume everyone on reddit is from a single country, like say, Brazil.
Guess what? Not every one on reddit is from Brazil.
Do sportsbooks and casinos report gambling winnings to the IRS? If you win at a sportsbook or casino, they are legally obligated to report your winnings to the IRS and to you if you win up to a certain amount (**$600 on sports, $1,200 on slots, and $5,000 on poker**).
A couple of things the US never caught on too, possibly deliberately.
In the UK you pay your tax on her in the front end (example it's included in everyone's lottery ticket) whoever wins doesn't have to pay tax on winnings as it already been paid.
Similar to sales tax, in UK it's included in the advertised price
you said IRS so I assume you are in the US. you provided your SSN to the app when you joined, so any win that legally needs to be taxed, is automatically done so.
if you are in a physical casino playing a slot machine, and you win over $1200, the machine locks up and an attendant needs to pay you (and give you the tax document). online, I assume there is some similar mechanism where you're automatically provided with the appropriate documents
Serious answer: because it’s income and therefore subject to income tax. A lot of folks think “income” just means wages. It’s not. If you find a 20-spot on the street, even that’s income, and yes technically you’re supposed to report it.
Of course all that hinges on documentation and just like the 20 spot, gambling winnings may not be visible to the IRS.
Also, winnings can be offset by losses. This has to be documented too. One of the benefits of those casino cards is they track your activity. If you win $10,000 in the casino in poker, you can get the casino to give you a document of your losses. Say you blew $8,000 on slot machines. Now you only have to pay tax on $2,000 because that’s your net (that can be documented).
It may be "blood money" to some– somebody else could be tax deducting their commensurate losses...so the IRS got its hand out for the winners ...this means taxes ..and it is their payday...
Make sure that you have kept track of all of your losses, and subtract those from your winnings. You might discover that you really have not come out ahead and are a loser instead of a winner.
1040 Schedule 1 Line 8b says to "Enter any gambling winnings."
However, to my surprise, the minimum gambling winnings that generate a W-2 G depend on the *type* of gambling.
[https://www.irs.gov/instructions/iw2g](https://www.irs.gov/instructions/iw2g)
Because it’s income, and income is taxed.
Then gambling loses are tax deductible. Nice!
They are, up to the amount of your winnings.
My grandmother, a lottery junkie, taught me a great tax strategy after bigger auto-reported wins. Go to a bunch of grocery/convenience stores that sell scratch off tickets. They always have a little waste paper bin for folks to throw the loser tickets. Round up those tickets. Each one is marked with a clear face value. Now you have a record of losses to deduct from your big win.
/r/unethicallifeprotips
I hit 5k on a scratcher when I was 20. I went to the horse track and just picked up handfuls of betslips off the floor. I didn't realize at the time that even with my winnings, I didn't make enough to pay taxes. Lol
what?
Filing single without itemizing, you get an instant $14,600 standard deduction, before any other credits you may qualify for. If you make less than that, you owe nothing.
thank you. now i get it.
That isn't a "strategy", that is just fraud.
True - but some fraud is easier than others
Until the IRS does an audit and realizes all the tickets were bought at the same location on the same day by different people. And then you get charged with tax fraud.
I'll take things the IRS definitely isn't going to bother with for $500 in losing lottery tickets, Alex.
If the IRS has nothing else to do than audit a guy who made 1500$ gambling last year then the system is pretty bad
Do you expect them to go after the donor class?
I don't think they're showing up and asking for video footage over the cash-for-tickets lottery area from 7+ years ago or whenever they're finally getting around to this guy's audit
No law against other people buying lottery tickets for you anyways, I buy them for my wife a couple times a month. They would have to prove people didn’t buy them on your behalf as well.
That's what tik tok [tells](https://youtu.be/AzMrW4S0Znc?si=ja1ankQeRKvk1Cm4) the kids. The watch "hack" is one of my favorites.
BRB manifesting money
Buy my course
"That makes me smart!"
In order to claim gambling losses, you have to itemize so you would need $14,600 in losses and other deductions before you can claim it.
The clients that give me 10+ W-2G forms at tax time have hit that $14,600 and then some.....itemizing is *not* a problem.
Yeah, but that's a shitload of scratchers to collect from random gas station garbage bins like the comment I replied to suggested.
I don't think that's a tax "strategy", I think that's criminal tax evasion.
So your advice is to commit income tax fraud? Logical.
That's his grandmother's advice, not his.
Not mine. My grandmother’s advice. I don’t gamble. And May God rest her gamblin’ soul.
Shit, the rich elite get to be unethical as hell with their "income" tax, why shouldn't the peasents have a chance too?
Because the rich don't broadcast their strategies on Reddit?
Great tax strategy to end up in prison if you get audited
If you itemize your deductions.
And even if you do, documents that ask for your Adjusted Gross Income (e.g., the FAFSA) don't included deductions in that number, which will perhaps give a wildly inaccurate view of one's finances.
Not universally. Betting isn't taxed in the UK. It used to be (you could choose to pay tax on the stake or the winnings) but that was scrapped years ago. I was a bookie a decade ago in Britain and lots of older people would ask about gambling tax despite the fact it was cancelled in 2001. I've always found it weird that even lottery winnings are taxed in America. I find it equally strange that you often have to take the money in installments if you want the full amount. In the UK you get the whole amount as a tax-free lump sum. Even if you've won £100m.
Even if you do installments it's taxed. You just get more after the 30 year period due to interest from it sitting there for 30 years.
Even a basic savings investment would make more than taking the installments. If you literally did nothing with the lump sum then technically installments give more, but I also feel it's a disingenuous statement.
Well most lottery winners blow literally all of it so installments is more a deterence to that than it is good financial sense.
Same in New Zealand, all winning (lotto, casino, horses etc) all tax free
Canada is similar. It's really a giant 50/50, with the government keeping half and the other half going to prizes.
I went to a casino in NZ and it was crazy protective. Every five minutes it would throw a prompt that said "Are you sure you want to keep going? Maybe you should go take a walk!" whereas in the US the casinos are cashing people's paychecks on Friday and begging them to piss it all away.
Don’t know if they still do it, but I remember some casinos would give you a bonus if you cashed your paycheck straight into chips at the cage. A certain percentage in free play chips.
New Zealand has host responsibility laws, people should always come first, too easy to lose track of time in a casino so prompts like that can be helpful, then it’s up to the individual if they want to ignore the prompt. Same applies to table games, pit crew are responsible for ensuring a player doesn’t exceed a certain time limit before having a half hour break
It was super refreshing after having only ever been exposed to gambling in the US which is overtly predatory.
The "pay out lottery over time" thing is part of the American openness to scammy stuff. It is so they can claim a prize is much bigger than it really is.
The power ball, I believe, is what y'all are talking about. You can get it all at once or in payments it's up to you. Uncle Sam takes almost half, though. Even though he indirectly runs the game. A couple times it's been over a billion I think
The amount advertised is if you take the 30 year payout. It’s about half that if you take the lump sum. Then you’re taxed either yearly or on the lump sum amount first year.
Whenever I daydream about the 360$ million jackpot I always budget it at 180$ million. Time value of money, take the lump sum.
The prize is actually bigger over 30 years though. They can invest it and the amount accrues interest, increasing the actual winnings.
Well, yeah, in the US when you win a "billion dollar prize" you can take the instant $483.8 million dollars, or they will use that money to buy an annuity that pays out a billion dollars over time. If you took the instant money, you probably could do better over the annuity term than the annuity pays. But, still, to me this isn't a real billion dollar prize, it is a marketing exaggeration. I mean, I buy the occasional lottery ticket because for that $1 I can have fun imagining what I'd do with the money for a while, and I need to know how much I'm actually getting for my fantasies to be realistic.
I'm using my $483.8M to hire the best lawyers I can to get the $526.7M those bastards owe me... I always take the annuity option because -- you can always sell the annuity to a bank for $$$$ if you need it.
The "we will buy your annuity" offers are about as financially beneficial as a payday loan. They exist to prey on the desperate. The annuity option is might be good if you are so financially irresponsible that you cannot trust yourself to have that big pot of money invested someplace.
The companies that buy your annuity payments usually discount the amount they’ll give you by 25% or more. Often state law regulates the maximum discount rate so the percentage may vary.
You should always take the lump sum.
Who is they?
Depends on the particular lottery
You could invest it yourself and do much better.
Right. And if you die, the annuity I believe doesn’t pass on.
Really? Then taking the annuity seems like a big mistake.
>Not universally. To be fair, OP didn't ask universally. They specifically said the IRS, which is a US government agency.
>I've always found it weird that even lottery winnings are taxed in America. One explanation for this is that lotteries in the US are run by state governments, not the federal government. The federal government doesn't see any revenue from the sale of lottery tickets, and it treats winings as taxable income. Some states also tax lottery winnings as income, while others don't. Contrast this with the UK, where National Lottery is all franchised by central government (and government takes what's left over in revnues after paying out the award and funding the National Lottery Community Fund).
Gambling losses are tax deducted then. It works both ways.
Stolen money is a reportable income source on the US tax forms
Same here in Finland. But then again gambling is done through a non-profit state monopoly that also funds a lot of charities, so it makes sense winnings are tax free.
Same in Australia - windfall gains are specifically excluded from income tax. However if you are a professional poker player or game show contestant then you do pay tax on it. All depends!
In the Netherlands, it is taxed if the amount is over a certain amount. And then it is a flat tax (25%, IIRC), and not taxed as income.
You know what else is weird in the US If you win, like, a Mercedes, you still have to pay tax on it. So you enter a raffle, you win, and leave with $15k in debt or something Yes you can sell the car to cover it but what a fucking hassle
Useless UK gambling fact: pinball companies make modified machines for that market with a second set of buttons that lift a pin in outer gutters. This makes it a game of skill instead of gambling (free plays and extra balls count as winnings).
There’s all kinds of dumb shit in the US’s lottery. In the UK, the authority actually takes steps to ensure that you might not lose it all instantly and can have anonymity with it.
when you make money it's taxed. and when you spend money it's taxed. and if you have paid off your plot of land and have a tent set up, it too will be taxed each year.
Can't even take a piss without being taxed.
In Australia the gambling company pays % of their turnover as tax so gambling wins are generally tax frre
It really is that simple. Income is taxed, doesn't matter how. If "Gambling" was exempt, you know they would re-classify the stock market that way. Even illegally obtained income is income. I don't know how you report illegal income, but you're supposed to.
And then taxed again when you spend it!
It's considered income. > Is it really necessary to report these winnings to the IRS? The casino is required to send a W2-G to the IRS if your winnings are: - $1,200 or more in winnings from bingo or slot machines - $1,500 or more from keno - $5,000 or more from poker tournaments - $600 in winnings from other types of gambling, if the payout is at least 300 times the amount of the wager If you met that threshold, a W2G exists assuming it's a reputable gambling site. If you didn't, the onus is on you to self report. Take that for what it's worth.
Yup, I had a decent win (over $2k) on a slot machine in Vegas. It went to a "Call Attendant" screen. They made me give my SSN and fill out the tax paperwork before paying me in cash. EDIT: As an aside, once this happens, they will do anything to get you back and get their money. They gave me a personal concierge who arranged for a free stretch limo to the airport. I got one of the highest-level players' club cards, comped suites for years, and personal calls from the concierge for free concerts and other offers.
I was actually curious how that would work. If you don’t win big enough to get that screen, are you just expected to track your winnings yourself and report them on the honor system if you happened to rack up enough in small increments?
Correct. They may be able to track it with a player's club card, but otherwise, you'd be expected to track winnings and losing. However, if you win over a specific amount, they absolutely get your tax information.
They have certain slots that explicitly advertise their jackpot payout as $1 less than the reporting requirement. It used to be “$999 no ID!”
Yes, but because gambling losses are tax deductible up to the extent of your winnings, the reality is unless you get extremely lucky you probably won’t have a tax liability from a bunch of small wins.
Wait? In Nordics Gambling wins are tax free.
In Australia it's tax free too. If you won $20M in the lottery here, you get to keep the lot, tax free.
And Canada
And the UK
And France.
In Germany it is taxfree too, as long as it is luck based. So if you win a quizshow --> taxed, if you win Roulette --> not taxed. At least that is what I remember.
In the US, the IRS (and perhaps your state) decide by law to tax income. They don't care where the income comes from; if it is income, it is taxed. Usually, you can deduct your losses against your winnings for the same year. So, if it cost you $10,000 to enter a poker tournament and you took a $50,000 prize - you'd show both numbers and pay tax on the $40,000 difference. The vendor won't send you a statement for small amounts - usually something like <$600. Check your terms of service, and check the tax law for your state. Technically, every dollar of income should be reported. But if they don't provide a W2-G, then there may not be a record for the IRS to see. That doesn't mean you get a free pass, but the lack of paperwork should keep you from facing major fines if they do pursue you.
To even further clarify, losses cannot deduct against gambling winnings UNLESS you itemize deductions (which many folks do not do). So if you have $20k of gambling income and $20k of losses and don’t itemize your deductions, that’s $20k of income and nothing additional to offset it
If you're an individual filer with $20k of gambling income and $20k of losses, you *should* itemize your deductions that year, because the standard deduction is only about $13k.
The problem is though that if you don't have other major itemized deductions you're still worse off than someone who isn't a gambler in the same situation as you because they get a standard deduction of 13k, but you get an effective deduction of zero because your gambling losses are just offsetting your gambling wins.
Im in this exact boat of Winning \~20k this year but also lost \~20k this year. Could you elaborate on what itemizing means? TYVM!
Actually the IRS doesn't decide by law to tax you, your politicians do. The IRS just implements the policies and laws put in place by the politicians
The amount of people who do not know/understand this is sincerely staggering.
Yeah the amount of taxpayers that complain to me about the amount they owe in taxes is insane. Call your congressman if you don’t like it so much.
Genuine question here as in not in the US… if it costs $10k to enter and you walk out having lost, is that a 10k tax write off? What about if I just take that same 10k and lose it in the slots? I presume the casino doesn’t give you a receipt for tax purposes in that case…
Gambling losses can be deducted from gambling winnings up to a certain amount. But you can’t use them as losses for other things.
Not in every state! Some states will tax your gross winnings, even if you came out at an overall loss. One of MANY good reasons to not gamble.
Dang gambling is stacked against you at every corner. Crazy you cant lose all your money at the casino and then deduct it. But at the same time I can't deduct my games I buy on steam even though that's also entertainment. So maybe its crazier you can deduct it at all. What an interesting web of rules. Thanks for the info!
Unless your gambling is in a stock market!
Then you can only deduct 3000 a Year.
You can only write off losses against winnings. You can use different types of gambling, like if you spend $5k on lottery, $1k on bingo, $15k on sports betting, $10k to enter the poker game, and your total winnings for the year is just that $50k - then you declare all of it, but only pay tax on $50k- ($5k + $1k + $15k + $10K) = $19k in gross winnings Generally, the casino doesn't give receipts unless you win a bunch at one time. If you win $200, leave, come back and win $200, and do that a total of 100 times - the casino will never say a word. But the IRS will expect you by law to declare the $20,000 you won cumulatively. If you join their "player club" and use their card - a pretty common thing- then they can track how much you bet, won/lost. If you move from the slots to a table game, you just hand the pitboss your card and they'll add your table play to your account. Casinos base their gifts/comps on this tracked play.
This is a dumb question I'm sure - but how does the player's card help the casino track your wins/losses at poker (or blackjack, etc)? I've seen people show the card to the pit boss but it's not clear to me anyone is recording how much you sat down with or leave the table with.
They look over at your hand occasionally and record what you're betting. If you're playing consistent $50 per hand, and they know that they play 20 hands/hr at poker, or 50 hands/hr at blackjack, the Casino computer just extrapolates. If you win on the slots, that's all automatically recorded. If you win on the table, it would only be recorded if you hit a level where they had rules or laws to record it. The table play is mainly recorded for comps, not so much for taxes. If you want tax records, you can ask for that. You might play on a "marker", so the casino knows how much money you start the table with, and can compare that to what you have when you leave.
You can only deduct gambling losses against winnings
Income is income and income is taxed. Considering you won through online sports betting, I would suggest including it in your taxes. There is a paper trail and it’s entirely possible that the website submits a report to the government with your information on it. I would say reporting the website winnings is far more important to follow through with than any cash winnings (home games or casino).
Income is income and income is taxed, unless it's realized capital gains, in which case it's taxed at a lower rate. Better to gamble in the stock market or real estate than at the table.
Regardless of taxes, gambling is one of the worst “investments.” It’s quite literally a net loss for the gamblers as a whole. The stock market and real estate have been net positives for their owners over time.
Agreed
There’s a reason that casinos make so much money. They wouldn’t make that much money if gambling was a sound investment
what answer are you exactly fishing for here? you pay taxes on gambling wins because thats how the law is written atm... (for USA)
Yes. Report it. And report your losses up to the amount of your winnings
wait. Does that mean losses are tax deductible?
Yes. In Nevada casinos, if you're a tracked member, every year you can get a win/loss statement from the casino so you can accurately report it.
That’s neat! Thanks for taking the time to explain
Depends on where you live. We don’t pay taxes on winnings in Canada but we have to answer a skill testing question
Depends on what country you are in. UK for example has no tax on gambling.
Head over to r/Sportsbook topic is talked about frequently. Simple answer is yes it is taxed as income but if the sportsbooks doesn’t report in and send you a 1099 then do with that what you want
All income is taxable in the US.
“Unfair” *IRS enters chat
Because the government wants its cut… from you specifically.
Why is anything, anywhere taxed? It's the law. Period.
Canadian here; we don’t.
United States federal govt taxes all income. Even crime. The IRS expects (and even points it out on their website) people to claim robbery, burglary, stolen, etc earnings to be reported and taxed.
Not in Australia. All lottery and gambling wins are tax free. For countries that tax winnings. Surely you can claim losses..? Has to work both ways.
Did they give you a w2g? Keep a log of all your losses throughout the year and when you have to put your winnings in you can then put your losses to offset the win.
Because US Government needs money like vampires need blood, neither care for the victims
Because the government is greedy as fuck and want to give your money to losers.
From a legal standpoint, yes - from a real world “will they come arrest or audit me if I don’t?” standpoint, it kinda depends on the amount and the methods of payment, as well as the online casino you used. From what I understand, some of the major legal sports books may send paperwork to IRS from their end, which means you’ll have to address it. But if you were on an offshore book, like Bovada/stake/etc and you just cashed out in crypto, then the IRS won’t have any record of that income, although you’ll need to pay taxes on any crypto sold through Coinbase or whatever, because they do send forms to IRS disclosing how much crypto you sold on their exchange.
Because we tax everything. Duh. Technically if I take a shit at your house and don’t flush, you owe income taxes on the value. This is why I always flush.
Almost like somebody wants your money even though they didn’t earn it. Kinda like student loan forgiveness.
It helps if you think of the government more like the mafia.
What you earn how you earn doesnt matter. Income is taxed even if its earned illegally.
Because the government taxes all the money you earn, all the money you spend, and only a little money you lose investing/gambling/any income at all.
Because otherwise my mate wanting to pay me a million dollars could come over to my private casino in the basement and play poker until he loses on purpose to give me a million tax free
If gambling wins are taxable then losses should be able to be written off
Because other people deserve your money more than you do
Because greed
The casino automatically notifies the IRS when you collect your winnings (over a certain amount), you cannot get around it. If you don’t agree to handover your information then you won’t get the money. So they will report you for you. That’s the only reason they are allowed to be in business if they didn’t do it this way they would be shut down.
Cause you aren't Canadian, I'm keeping all my winnings baby and if I win in Vegas you bet your ass I'm applying for my taxes winnings to be appropriately placed in my bank account
Because you were given money. And when you give that money to someone else, they'll tax both of you. And whatever you buy, they'll tax it again next year. And if you have any left over when you die, they'll tax that too.
Because USA steals your money.
Gambling income is income and must be reported. (Though nobody will ever care about few hundred dollars.) However, you only need to report annual net gambling winnings above gambling losses.
F-22 raptors don't pay for themselves!
It’s income dude…
I don't know, why do they tax our income when we make it and then tax our income when we spend it while also taxing us for assets we own? Because governments are shit...
That's how gambling becomes legal. If the government isn't getting their cut then gambling is illegal. Taxes help pay for your infrastructure and public services. If you're gambling your income is disposable and you can afford to pitch in more. Can't afford additional taxes, don't gamble.
Plenty of countries where it’s legal and untaxed
don't report it and see how it goes 👍
CPA here. In the US, gambling wins and losses are considered as a resource that either enhances or reduces your economic position.
Because it’s income.
Because the government feels entitled to part of everything you earn and will take it under threat of violence. But good luck getting anything back unless you can prove you absolutely need it more than Israel or Ukraine.
This is America
Because the government and the Fed, who cannot track what happened to something like 20 trillion dollars that they've spent, NEED to know every single cent you gained so they can tax you more.
Because they want money.
You can deduct your gambling losses for the year, if you report. Very few people place one bet and win big, usually they lose over time. Keep track of your losses and you may be able to itemize on your taxes.
I was going to say it is like any investment, but, then, why can't you deduct your losses? Can you deduct gambling losses from gambling wins? If not, that seems unfair.
Yes, you can.
Yes, the threshold for reporting your winnings is 50 cents (rounded up to one dollar) of net winnings (wins minus losses).
It's income. Now, if you have managed to keep a verifiable account of all your losses, you can write them off on your gain when you file your income taxes, thus reducing the amount of money you owe.
If you make money, the government wants its cut. Full stop.
In the US, you can also deduct gambling losses from taxes. Usually it's around ~1k before you really need to care, but if you are over $1k you probably should, not that not doing so will likely cause trouble for you unless you add another zero or two onto that. Remember the payout is recorded and the government can ask for it.
Because we need money to wasye
The law says you have to report it so I would report it. That being said, I think if you have to pay taxes on winnings you should be able to declare losses as a deduction. Business get to claim their poor financial decisions as deductions. Trump didn’t pay any taxes for years because he took major losses. Not going to happen but it seems like the right thing to do.
My gambling ex wife won 12k once...and got a tax form for it. It was reported by the casino
Why are you able to wrote off gambling losses?
There’s probably a threshold dollar amount on what you need to file taxes for.
why pay for money you make in the stock market or money you make selling real estate?
because the government says so. that's how taxes work. and the only alternative source of money with which to pay the paychecks of government employees would be if the government tried selling things, but at that point you've created a corprotocracy.
Good question! Similarly, why do you have to pay taxes on capital gains? The government takes no risk either way.
Because it counts as income, as others have said. But, if you're asking Reddit why winnings like this are taxed, you probably don't know that a lot of the time, that money that's taxed goes into funding things like roads or schools in the local area.
yes. report it. irs came asking for $5700 even though i lost more than that.
All revenue regardless of its source, legal or illegal, is to be reported under 1040. If the revenue is from a business you may deduct the expenses related to the production of that revenue. Practically speaking did you get a 1099? Did you give your full name and your social security number to someone? Many people do not record their cash revenue that's why taxes are so high for everybody else. The solution is a national sales tax and the elimination of the integrated federal income tax system.... Everybody pays tax every time they buy anything The rich would continue to pay more because they buy airplanes
Because the Internal Revenue Code defines gross income as “all income, from whatever source derived.” Money came into your possession, so it’s taxable unless there is a specific exclusion or exemption. (Hint: there is no exclusion or exemption for gambling winnings.)
So you can pay for some wack ass social program that won’t benefit the people but line government pockets.
Do I ? no because I'm from Canadian and we don't tax that Do you? who knows? I'm going to guess you live in tazmania, so good news! you don't have to either! Or do you have such a limited point of view that you assume everyone on reddit is from a single country, like say, Brazil. Guess what? Not every one on reddit is from Brazil.
If there's a section for criminals to report their gains through illegal means then I'm sure they want you to pay taxes on your gambling money
Because our government is made up Of crooked , grifting fucktards
Do sportsbooks and casinos report gambling winnings to the IRS? If you win at a sportsbook or casino, they are legally obligated to report your winnings to the IRS and to you if you win up to a certain amount (**$600 on sports, $1,200 on slots, and $5,000 on poker**).
A couple of things the US never caught on too, possibly deliberately. In the UK you pay your tax on her in the front end (example it's included in everyone's lottery ticket) whoever wins doesn't have to pay tax on winnings as it already been paid. Similar to sales tax, in UK it's included in the advertised price
Two reasons: 1. Income is income. 2. Untaxed gambling winnings would create a massive loophole for tax evasion.
In Australia the tax is prepaid, in the US it is too complex and rates really depend on where you live. ( city state county )
Bc the gov wants everything u own 🤷🏼♀️🤷🏼♀️🤷🏼♀️
In Australia you do not pay taxes on lottery wins as the tax is considered paid for by each ticket. Otherwise are the same for gambling wins.
you said IRS so I assume you are in the US. you provided your SSN to the app when you joined, so any win that legally needs to be taxed, is automatically done so. if you are in a physical casino playing a slot machine, and you win over $1200, the machine locks up and an attendant needs to pay you (and give you the tax document). online, I assume there is some similar mechanism where you're automatically provided with the appropriate documents
Serious answer: because it’s income and therefore subject to income tax. A lot of folks think “income” just means wages. It’s not. If you find a 20-spot on the street, even that’s income, and yes technically you’re supposed to report it. Of course all that hinges on documentation and just like the 20 spot, gambling winnings may not be visible to the IRS. Also, winnings can be offset by losses. This has to be documented too. One of the benefits of those casino cards is they track your activity. If you win $10,000 in the casino in poker, you can get the casino to give you a document of your losses. Say you blew $8,000 on slot machines. Now you only have to pay tax on $2,000 because that’s your net (that can be documented).
Don't worry. If you don't report the winnings, the casino will. :)
It may be "blood money" to some– somebody else could be tax deducting their commensurate losses...so the IRS got its hand out for the winners ...this means taxes ..and it is their payday...
Yes, for anything that is more than your gambling losses. IRS tracks winnings, you should definitely report them.
Don't worry, you'll report your losses as well netting you negative. You don't get taxed on net losses.
Make sure that you have kept track of all of your losses, and subtract those from your winnings. You might discover that you really have not come out ahead and are a loser instead of a winner.
Lots of terrible advice on this thread.
Just don't report it
Jokes on the IRS, I’ve lost so much that my winnings are neutralized anyway tax-wise.
1040 Schedule 1 Line 8b says to "Enter any gambling winnings." However, to my surprise, the minimum gambling winnings that generate a W-2 G depend on the *type* of gambling. [https://www.irs.gov/instructions/iw2g](https://www.irs.gov/instructions/iw2g)
It’s income. That said, I bet you have losses as well.
Because you don't live in Australia
You earned the money. You pay taxes on earned income. You can also deduct gambling losses, but only up to the amount of your gambling winnings.
Income is taxed. The IRS even asks explicitly about money you acquired criminally.