Gambling, Winnings, and Taxes: A Comprehensive Guide for Online Casino Users
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We have a few things that are important when it comes to online gambling – having fun and winning money. You can prioritize either, but if you ask us, winning should be at the top of the pyramid. Having fun is great, but it will quickly dry up once you start losing money. When you win, and you will, the situation is not crystal clear. You’ll encounter a small matter of taxes. That’s right, as it’s usually the case, when there is income, there is the involvement of taxes.
You’ve heard the saying, that only a few things in life are certain, and taxes are one of them. Gambling doesn’t come free of charge. When you deposit money, gamble, and consequently win, sooner or later you will have a desire to withdraw the winnings and enjoy your hard-earned gambling money.
Before you do that and start spending you must consider taxes. Now, the situation varies from the place where you live and the online casino you’re using. The jurisdiction will not always be identical, and laws that apply might differ.
Because of everything said, you must be aware of your legal responsibilities in the domain of taxes. You want to avoid a scenario where you achieve large online casino wins, spend them all, and then are left with paying the taxes on a withdrawn sum. Most casino transactions are done through your account, so the money will leave a trace.
If that’s the case, you need to be careful, or you’ll have the IRS knocking on your door, and that’s not a pleasant surprise. So, let’s delve into the small matter of taxes, in case you have a massive win, and you certainly will, because that’s why we play.
Are Online Casino Winnings Taxable?
Gambling online is quite fun. You play to win, and once you have that win in your hands the time is to withdraw the cash and enjoy both your win and your money. But, before you start spending money on luxury items and fancy dinners, it’s better to think about taxes first. Yes, that’s not a favorite subject among gamblers, but it is one worth discussing. Are your online casino winnings taxable? This is a question that every gambler asked himself at least once.
First of all, it depends on both the place where you live and where you play. Some countries, God bless them, do not impose taxes on gambling. They want to support the gambling industry, and not take any of the joy of the players. So, for example, if you’re located in Austria, Serbia, UK, or Canada and you’re playing at an online casino over there, whatever you win will not be taxed.
That’s right, the entire sum will be yours. In these places, and other countries such as the Czech Republic, Germany, Malta or Belgium bookies and online casinos are those who pay taxes. What this means is that Canadians and those who enjoy games found at casinoforcanada.com can play relaxed as there will be no taxes imposed on them.
This brings us to a unique situation in the world of gambling which is the United States of America. As one could have guessed, the rules applied in the US are quite different compared to the rest of the world. Considering that America is one of the largest gambling markets on the globe and that they’re slowly legalizing web-based gambling in the majority of their states it is vital to know at least a few of the rules.
Internet Gambling and Taxes in The USA
A love/hate story. The good news is that today you can gamble in the majority of US states. The bad news is that you’re obligated to contribute. All gambling income is susceptible to tax authorities. The worst part for a casual gambler is the fact that if you’re playing in a US-licensed casino, it will report any income to the IRS in case your win is exceeding the $1200 mark for slots and video poker wins and all wins over $600 tied to table games. When you play in offshore licensed casinos your wins will not be reported directly to the IRS but the money flow will be seen on your bank accounts nonetheless. Because of this, you’re obligated to report it to the IRS.
What’s important to know and learn when it comes to US tax laws is that all income is taxable. It doesn’t matter if you won money gambling or an aunt sent it to you. If you’re a US citizen having an unreported income could pose many issues. First of all, there is a small matter of the legality of gambling in some states. So, there is a chance that you get tired of both tax evasion and breaking the law in some other domains. As far as the IRS is concerned their primary focus is on collecting taxes. So, if you avoid paying them and get found out, you will not only pay the owed sum but also penalties and interest that will accumulate over time.
Is There a Way to Avoid Taxes?
While the answer could be yes, we’re inclined to say no. It is all a matter of local laws and jurisdictions. As we said, there are places all over the globe where gambling wins are not falling into the tax bracket. So, it is great to win if you live in Canada or Austria, but not so much if you’re in the US. The US laws are strict when it comes to gambling and taxes and you shouldn’t even attempt to avoid them. The one way you could try to go around taxes and gambling income is if you play in one of those cryptocurrency online casinos. Digital currencies are not centralized and these casinos guarantee anonymity the same way crypto does, but that’s another story.
Bottom Line
If you’re living in one of the European gambling paradises or Canada, you shouldn’t worry about taxes. On the opposite side of the spectrum, countries such as the United States of America are strict when talking about gambling and taxes and you need to obey the rules. Report all of your income, or risk consequences. You should both gamble responsibly and file your taxes the same way. It’s a win-win situation that way.
