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Did you know it's required to report gambling winnings on your taxes?

Gambling is more than just a form of entertainment or hobby; according to the IRS it is also considered a form of income. Since income must be reported for taxes, any winnings you receive from gambling must also be reported. These winnings can be anything from casinos, lotteries, horse races and raffles to cars, trips and other cash prizes.

Professional gamblers and casual gamblers are classified in two different groups and have separate requirements for reporting taxes.

Professional gamblers tax requirements

Considering yourself a professional gambler by trade, means your sole income is based off earnings from gambling. Professional gamblers are required to file a Schedule C (Form 1040), and can often find themselves in hot water with the IRS for not complying or correctly reporting their winnings (or losses). It is in the best interest of anyone who falls under this category to pair themselves with a tax professional that can help guide them through the process.

If you happen to be a professional gambler who has not been diligent with reporting their winnings (or losses) and has been threatened with an audit, fears they might be audited or wants to catch up on their taxes before the IRS gets involved. Contact an attorney right away - you do not want to face the IRS without professional representation.

Casual gambler tax requirements

It is the responsibility of anyone who casually gambles to keep track of their winnings throughout the year and report them (on Line 21 of Form 1040) when filing taxes. Gambling establishments will automatically supply you with Form W-2G when your winnings exceed a certain amount, this must be included when filing. Casinos and other gambling establishments report any money that comes in or goes out, so if you received Form W-2G for winning a larger amount and do not report it; it will likely catch up with you.

If you are someone who only gambles randomly for entertainment, it's possible you didn't even realize these regulations existed. Don't let this discourage you from enjoying a fun night out at the casino, just be cautious of your winnings and make sure to report them!

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