Any lottery and gambling winning’s that one receives in the United States has to have taxes imposed on them. So you need to keep in mind that you will have to check into the federal tax forms and laws that need to be followed so you can file for any lottery and gambling taxes that you are obligated to pay. First of all, make sure that you choose the correct filing status. For those that are considered “recreational gamblers,” you need to check on the requirements for those that report and withhold this type of gambling. The ratio of the amount won to the winnings of the wager really does matter. There are poker fanatics that argue card playing shouldn’t be counted as gambling, but is instead a game of skill. Las Vegas tax on winnings? The IRS still looks at this as gambling, but allow up to $5000 dollars of winnings before having to start paying taxes on them.
The bottom line on lottery and gambling taxes is if you are fortunate enough to win a considerable amount of money, you have to report it to the IRS. It is usually on site, so when you win a certain amount, you usually don’t leave with that amount. The IRS collects their money at the casinos and other gambling establishments.
On top of telling the IRS how much you won, the individual companies will withhold 25 percent of the money off the bat of what you won. You have a hard time short changing the IRS by refusing to show your Social Security Card, because if you do so the establishment may take even more out of the winnings.
No matter what, the casino or other establishment will give you a form that is labeled W-2G, and this is going to show the IRS how much money was won, as well as the amount of taxes that you paid up front.
It doesn’t matter if you won enough to file the W-2G or not, it isn’t the right thing to do for you to skip out on filing the winnings as income. It is your responsibility as a tax payer to report the income to the IRS, even though most of us don’t want to.
You don’t have to pay the IRS taxes on every bit of your winnings. You can reduce how much you pay them by letting them know about all that you lost when gambling as well.
This insight into lottery and gambling taxes, including what you need to report to the IRS should help out on that next win. Just make sure you do the responsible thing and pay Uncle Sam.