It’s been a while, but we’re now returning to the Casino Online mailbag! Every now and then we answer questions from players regarding everything online casino related. We do our utmost to provide the correct answers to your queries and if we can’t help, we’ll discuss the matter with a casino expert who can (just check out our Experts section for more details). Today, we’ll introduce how casino tax statements in the US work and whether you have to pay taxes on online casino winnings.
If you win over $1,200 at a land-based casino, then along with your winnings, you’ll receive a statement known as a W-2G form. A copy of this form also goes to the IRS (the US version of the Inland Revenue) and by law you are required to state your winnings on your next tax return. Experienced gamblers keep records of their gaming activity, meaning they can deduct losses run up before winning and reduce the amount of tax they have to pay. However, some players forget to keep a log, which therefore means the IRS can deduct taxes from the player’s winnings, without counting any losses.
As online casino players will tell you, it’s relatively to easy to get hold of your winnings vs. losses logs and you can easily discuss getting hold of them with customer support. The tricky part is, in the case of US players, figuring out whether you have to pay taxes. A recent Wall Street Journal article has highlighted just how murky the law is surrounding online gambling in the United States. Eva Rosenberg, a journalist at Wall Street Journal, took the matter to the California Franchise Tax Board, who replied that it’s effectively up to the taxpayer to decide whether online gambling is legal or not. This then decides whether winners should have to pay partial taxes (winnings – losses) or a full tax on their winnings, regardless of how much they have lost.
The IRS suggested that they are happy for winnings taxes to include loss amounts, provided that players can get hold of game logs (which, as we noted earlier, is relatively easy to do). So where does leave you with regards to the question we posed at the beginning of this blog post? Well, whether you have to pay taxes depends on the following:
- How honest you are
- The state you live in
- Whether you want to admit to gambling online
The tax issue also depends on the jurisdiction which the casino is based in. Rosenberg used the example of a player who had wagered at a Kahnawake casino. As online casinos in this jurisdiction are legislated by tribes who also owned land-based casinos, if you played and won at a Kahnawake casino, you could argue that you simply played at a tribe owned casino and are therefore entitled to the same tax rights as an offline gambler.
If you urgently need to find out whether you need to pay taxes on your online gambling winnings, then we recommend you contact your local state government representative, who can advise you on the issue (provided they’re not Steve Beshear).
Finally, in other news, you can now submit your questions to us via Twitter, by tweeting your question followed by @CasinoOnlineUK. We look forward to answering your questions!
