Q: Tax Playa, do I have to pay taxes on what I win at the casino?
Terrence, Arlington VA
A: Any gambling winnings is considered taxable income and must be reported. However, under certain circumstances you can deduct gambling losses to the extent of winnings.
Gambling winnings are fully taxable and must be reported as "other income." Gambling winnings include but are not limited to lotteries, raffles, horse races, and casinos. It includes both cash winnings and the fair market value of non-cash prizes like trips and cars.
Installment payments on a lottery jackpot are reported each year as payment is made. If you sell your interest in the installment, the proceeds are taxable.
If you receive a substantial amount of gambling winnings, you will be issued a W-2G so that the IRS knows you earned it. Certain types of winning are also subject to 25% federal income tax withholding.
You may deduct gambling losses only if you itemize your deductions, and even then only to the extent of canceling out gambling winnings from that year. You must keep an accurate diary of your winnings and losses, and be able to document your losses via stubs or other receipts.
Do you take donations via paypal?
Posted by: M Martin | 2008.09.29 at 09:21 PM