Taxation of Gambling Earnings

Do you enjoy playing? Many people find it enjoyable and relaxing to go to a casino and hang out at the video poker machines or tables. A big เกมส์ PG SLOT ทังหมด problem we see as accountants is that most people don’t understand how the earnings affect their tax return. Here are a couple of examples.

About 25 years ago a good friend of my own called me and laughed and said her elderly parents choose to go to Wendover, NV and won $50, 000 playing a quarter slot machine game. They lived on their Social Security and wasn’t required to file a tax return in several years. They wanted to use the money to buy a house, you could do that 25 years ago, but were scared about how much taxes they must pay. It proved they made it possible to pay the tax and get a house, but because of the added income, they had to pay taxes on their social security income, which normally would not have had to do.

Another couple I know lived in a town with several casinos. One of their past times would the casino after work. Over the course of a year, they had won $250, 000. However, they had actually spent more than their earnings. They both had good jobs and only one dependent. When we figured their taxes they to be paid a lot of money. They couldn’t realize why they to be paid so much when they spent more than they won.

It was not an accounting error; playing earnings and expenses are taxed differently than other income and expenses. Let me explain. Your earnings are included in your adjusted gross income, but what you spend is deducted on a Schedule A. Now, if your adjusted gross income is way too high, the IRS places limits on the you can deduct on your Schedule A and other places including medical expenses, educational costs credits, child tax credits, exemptions and employee business expenses. These reductions are limited before your playing losses are deducted. This means that even if you break even with your playing earnings you are going to loose valuable tax reductions, which cost even more money.

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