Posted by James Financial Services Inc

How to Report the Super Bowl and Other Taxable Gaming Income

How to Report the Super Bowl and Other Taxable Gaming Income

If your weekend plans include placing a bet on the Super Bowl, remember that Uncle Sam wants some of what you will win if you win.

It is expected that Americans will bet around $6.8 billion in the clash on Sunday night between the Kansas City Chiefs and the San Francisco 49ers in Miami. And no matter where you place your bet, whether it's in a casino, online, or fantastic league or at your high school reunion party, the IRS expects you to be open and come clean about it during tax season.

Most people don't realize that they have to report any profit from gambling. What some people don't know is that all gaming earnings are taxable, which is why we have taken our time to put this article together so as to remind players that all gaming earnings are taxable and examining how they report these payments to the Internal Revenue Service is paramount to avoid issues.

All Gambling Proceeds Are Taxable

If you place your bet on a legal gambling establishment in New Jersey, Pennsylvania, Rhode Island, Delaware, New Mexico, West Virginia, and Mississippi, you will most likely get a W-2G form the following year detailing your winnings. Also, note that the IRS will also receive a copy, so be sure to report this income.

If you do not receive an official income statement because you did not win much or bet with the neighboring bookmaker, you are still legally responsible for the gaming costs. Yes, the IRS is unlikely to be able to track this money but just in case.

If you are bothered that the IRS will report your illegal bets, don't be. It's not part of the job description of the IRS officers. IRS is only concerned about its share of taxable profit. 

Look For Tax Returns

As mentioned above, new gaming offices in many parts of the country will make it easier for the IRS to track your winnings.

Sometimes the winnings won't set off the new retention rate of less than 24% when the lucky player is paid. In other cases, a gambling establishment asks the winners to have a tax ID (the social security number of the person) for tax purposes.

With or without withholding tax, if you receive a W-2G, indicate the amount on the form in the income tax return. The IRS will also receive a copy of this form; therefore, if you do not notify the IRS, the tax agents will request it.

Gambling records are essential

To be sure you get the most out of these bad bets, keep good records.

In general, you can prove your winnings and losses through official documents, such as the W-2G, as mentioned above or Form 5754, Declaration from the person (s) receiving the gambling.

Other winnings and losses on the game can be verified by betting tickets, canceled checks, credit records, replacement checks, bank, and ATM withdrawals, and actual winnings or payment receipts provided by the gaming unit.

The IRS also suggests keeping your own form of documentation in the form of a journal. This is because if an IRS examiner sees something suspicious, the entire game journal and related documents will help you show how you reduced your $20,000 winning bets on the Super Bowl to zero.

Tax Calendar 

Finally, don't forget that yesterday's big game winnings will be displayed on your 2019 tax return, which expires next year.

For this year's Tax Day, July 15, you must collect last year's winning receipts and lost tickets to count the correct amounts to include in 2019 schedules, and forms.

To avoid these classification problems this year and the following registration years, immediately launch a betting journal and a collection of supporting documents.

James Financial Services Inc
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