Friday, August 31, 2012

5 tips on how you pay taxes on gambling wins.

It fun to roll the dice, bet on the ponies or win in cards -- especially when you are on holiday.
Winning only makes your days off that much sweeter.
But there's a price: Your gambling winnings are fully taxable and must be reported on your income tax return, according to Mike Dobzinski, the Plantation-based spokesman for the Internal Revenue ServicesGambling income
includes winnings from lotteries, raffles, horse races, and casinos -- whether it is cash or the fair market value of prizes such as cars and trips.
He gives four tips for gamblers to be aware of:

Gambling operators are required to  give you Form W-2G, Certain Gambling Winnings, if you win $1,200 or more in gambling winnings from bingo or slot machines and more than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament.
Report all gambling winnings on the “Other income” line of Form 1040, U.S. Federal Income Tax Return.
Claim your gambling losses up to the amount of your winnings on Schedule A, Itemized Deductions, under "Other Miscellaneous Deductions."  You must report the full amount of your winnings as income and claim your allowable losses separately. You cannot reduce your gambling winnings by your gambling losses and report the difference. Your records should also show your winnings separately from your losses.
Keep accurate records.
"If you are going to deduct gambling losses, you must have receipts, tickets, statements and documentation such as a diary or similar record of your losses and winnings," Dobzinski said.
Go to IRS Publication 529, Miscellaneous Deductions, for more information. Or call 1-800-829-3676.