Is Gambling Income Tax Free
In countries where gambling is legal, there are varying opinions on whether or not winnings from gambling should be taxed.While there are a number of countries where all or some of the winnings from gambling are taxed, there are many gambling tax-free countries as well. Iowa residents who have winnings from gambling in another state may have to file an income tax return with the other state and pay tax on the winnings. These winnings are also taxable to Iowa. However, the Iowa resident may claim an out-of-state tax credit on the IA 130 of the IA 1040 for the tax paid to the other state. When you exceed these amounts, the casino may withhold taxes and will provide you with IRS Form W-2G. They keep the original and give you two copies of the form. (If state income tax withholding is required on gambling winnings in your state, additional taxes may be withheld.).
However gambling items that are used as an INCENTIVE are not, e.g. free hotel rooms to entice you into the casino.
So what about free-play? This clearly falls under incentive however, once its played it turns into cash. But that cash is a direct result of the free-play.
Lets say you get a thousand dollars in free play and after taking one thousand spins at a dollar a spin you have eight hundred dollars left in the machine and you cash out. Do you have eight hundred taxable dollars or eight hundred dollars that as a result of the incentive are not taxable.
To say they are taxable is to then claim the incentive is taxable since the free-play is directly tied into the cashable money.
To put it another way, the free-play has no cash value but turns into cash value as a direct result of its use.
Lets consider free hotel rooms. They DO have a cash value but are not taxable and they DONT necessarily turn into money won (you could stay all day in your room and not play or go to another casino) so they are not directly tied into winnings.
But free-play is. And you would have to end the 'Value' of the free-play with the last free-play spin. You couldn't argue the free-play left over has to be grinded down to nothing because that would be playing with your own money now and not the value of the free-play.
Anyone have any sure knowledge of this because I get a lot of free-play and I cash out when I am finished (without w2-G) and wasn't sure if I should be reporting free-play results.
Thanks
So if you have $100 in freeplay and you play it off at a slot machine and lose it all, there is no taxable income. But if you turn the $100 freeplay into $200 real money, you have $200 of gambling winnings to report. (Note that, in comparison, if you put $100 of real money into the slot machine and cashed out $200, you would only have $100 of gambling winnings to report). Since the freeplay is non-transferable, there is a good legal argument for this.
However, interpreting any law is a grey area so until a court has come out and ruled one way or the other, there is no 'right' answer.
Irs Where To Report Gambling Income
i would imagine you can find out what the casino reported to the IRS regarding you if you ask.
Wouldn't a casino win/loss statement be considered an expert source concerning what you should claim as gambling income, especially in the case of slot-related revenue? I'm no expert either, just sayin'.
Casino win/loss statements should NOT be used for tax purposes. In a pinch you might be able to get away with it if you have no other documentation, but your first and primary source should be your own gambling diary.
Income Tax Gambling Losses
For machine play, the win/loss report should be pretty accurate (as opposed to table games where it can be wildly inaccurate). But that's still assuming you played with your card all the time.Wouldn't a casino win/loss statement be considered an expert source concerning what you should claim as gambling income, especially in the case of slot-related revenue? I'm no expert either, just sayin'.
When you view your win/loss statement, it'll say something along the lines that the statement is an estimate of your win/loss and should not be used for tax purposes.
Wouldn't a casino win/loss statement be considered an expert source concerning what you should claim as gambling income, especially in the case of slot-related revenue? I'm no expert either, just sayin'.
I did not mean to imply a casino win/loss statement should be the sole basis for reporting gambling income, but I can see how that would be inferred from my statement. What I meant so suggest was, given you have your own records, you could use the casino win/loss statement to determine whether or not the casino considers free-slot-play as taxable. Perhaps the casino shouldn't be considered experts in the matter?What I meant so suggest was, given you have your own records, you could use the casino win/loss statement to determine whether or not the casino considers free-slot-play as taxable. Perhaps the casino shouldn't be considered experts in the matter?
I think I understand what you're saying. The casino win/loss statement could potentially be used against you, so it's probably something to be aware of.
But of course the casinos are not tax experts. For example, they've been known to advertise $1,199 slot jackpots as 'tax-free.'