After winning big at the lottery or casino, taxes may be the last thing on your mind. Unfortunately, they’re there anyway–the IRS wants their share. From betting on football games or slots online to horse races betting and raffles; all gambling earnings are taxed as income according to IRS standards – whether money from lotteries, casinos, sports betting, raffles or raffle prizes including cars and trips as well as noncash prizes won in lotteries or raffles!
If you are a winner at gambling business, an IRS tax form known as W-2G should be issued to you as part of their payout. This form shows how much was won and any federal income taxes withheld; you should receive this either onsite at the business or via mail after it has been sent off to IRS. Alternatively, raffle or sweepstake prize winnings might get issued with Form 1099-MISC instead; in which case it must be filled out separately and submitted directly to them.
Additionally to your federal income taxes, state or local gambling winnings taxes might also need to be paid on. The exact amount owed varies by state – please check with the tax department in your home state to learn how its gambling laws operate.
Gambling losses may be tax deductible if you itemize deductions when filing your return; standard deduction claims do not permit gambling losses to be deducted. Professional gamblers may be able to reduce their tax bill further by deducting winnings as business expenses; to do this they must show proof that gambling is their primary source of income as well as have a detailed business plan in place.
The IRS suggests keeping a diary or similar record of your gambling activities, both wins and losses. Make sure that each bet or gambling activity, the date, type, establishment name, amounts won or lost and amount won or lost are documented accurately. Also keep copies of wagering tickets, cancelled checks, bank withdrawals and credit records as this information will come in handy when filing tax returns; being organized will help avoid overpaying taxes on winnings from gambling activities. For any questions related to filing gambling winnings contact either your tax professional or the IRS