If you’re hitting the jackpot, make sure you save a little for Uncle Sam.
Whether you gamble all the time or only once in a blue moon, you are filled with hope and excitement every time you walk through those casino doors.
If you have been gambling for even a little while, you already know that Lady Luck can be a fickle partner. Sometimes the odds of the casino are in your favor and sometimes not so much. So, when you finally hit the jackpot, you are overjoyed and brimming with excitement…
At least until you consider the tax consequences of your good fortune.
Every time you walk through the doors of the casino, Uncle Sam is peering over your shoulder, and the IRS will be waiting with its hand out when good fortune finally comes your way.
So, as you rejoice over your big win, do not forget about your taxes; if you do, the IRS is sure to come calling. If you have any tax issues, or find yourself owing a large amount in back taxes, reach out to our tax resolution firm and we’ll help you navigate any obstacles.
Ask About a W2-G
One of the main things you need to know about winning big at the casino is that the IRS will receive notice of how much you won. If you try to fudge the numbers or not report the win at all, chances are you will soon be on the wrong end of a tax bill.
It is crucial to report all your gambling winnings, even smaller jackpots that may not warrant a W2-G, the form on which those monies are recorded. And if you do win a substantial jackpot, ask the casino workers about how and when the tax forms will be issued.
When you have a lucky day at the casino, it is easy to blow your winnings, especially if you have never been so lucky before. But before you spend your last dollar, you might want to set some aside for when tax time rolls around. If you fail to keep that money available, you could be in for an unpleasant surprise, and a big tax bill, when you file.
Casinos know that their customers may have difficulty paying taxes on their winnings, and that is why many of them will automatically withhold a portion of the jackpot. If you do win a substantial jackpot, make sure you understand whether, and how, this withholding will take place.
If you are unsure about having the money to pay the taxes due, you may be able to ask the casino to do the withholding for you. Not all casinos will be willing to do this, but it never hurts to ask.
Track Your Losses
The fact that you must pay taxes on your gambling winnings may seem unfair and arbitrary, but the IRS is not entirely heartless. You may be able to write off some of the money you lost in pursuit of your latest jackpot, but only if you can back up those numbers with hard data.
Keeping track of your losses is never a fun thing to do, especially if you are a regular casino visitor. Even so, it is important to keep track, and many casinos will do the work for you.
If you have a casino loyalty card, you might be able to log on or request a report showing how much you spent, and how much you won, while your card was in use. This is not a perfect solution, but it can be a good first step if you plan to write off your losses in hopes of reducing your final tax bill.
Having a lucky day at the casino feels good no matter who you are, as does walking out of the casino with a stack of cash and a big jackpot to your name.
But the next time Lady Luck smiles on you, make sure you set aside a little for Uncle Sam.
If you find yourself behind on your taxes and owe more than $10,000, contact our firm. We’ll schedule a no-obligation confidential consultation to explain your options to potentially settle your tax debt for less than what you owe.