The sweetest money is the one you win without working and when least expected.
This is arguably the reason why people enjoy gambling so much and spend so much time in land-based and online casinos. Las Vegas is the main attraction for players from all over the world and they continue to appeal to an international audience. What both Americans and foreigners playing here need to know is that even if they win, their profits will be subject to taxation.
Gambling winnings are taxable by the IRS
The Internal Revenue Service is “very serious” according to CasinoSites.org when it comes to gambling and resulting profits. It once a share of the winnings and will go to great lengths to make sure that the lucky players will pay their dues. Since gambling winnings are taxable, it’s important to know how these are paid and how much money are players liable. The good news is that gambling taxes are not progressive, but there are various thresholds for which winnings must be reported.
Not so long ago, the tax rate for Las Vegas made profits was 25% and it only decreased to 24%. The amount is taken by the casino automatically and you are given a W2-G IRS form that allows you to report winnings to the government. This is, of course, disappointing for players who found the way to beat the house edge, but at least some of the gambling losses are deductible. You can subtract the losses from the winnings to play less tax, but you can’t use your Las Vegas losses to reduce your overall taxes.
How are Las Vegas profits reported?
Casinos report earnings to the IRS, but only if they cross a certain threshold. There is simply no point in overwhelming the institution with insignificant winnings made by lucky players. In poker tournaments, only profits in excess of $5000 are reported, whereas slots and bingo games have the threshold set at $1200. There are different requirements for blackjack, roulette and craps players. The main reason is that it is hard for the casino to determine the amount you started with a table games.
The casino is only partially responsible for reporting winnings and players have their share of responsibility. You can’t use the excuse of not receive a W2-G form and are supposed to report your winnings at the end of the year when you file the taxes. Professional gamblers are also subject to taxation and casino profits are considered regular earned income. Nonresidents can’t deduct gambling losses, but they also have to report winnings using the Form 1040NR. By doing so, they are subject to 30% taxes.