While living in Australia, USA or Singapore, don’t forget that all of your income is taxable. Whether you earn it from legitimate sources or other sources like gambling. If you win through gambling then you have to report it on your income tax return. Gambling income is actually the income that you earn through chance and you play the game in hopes of winning money. Usually the games played are lotteries, cards, bet on horses, play craps, raffles, casinos or blackjack. Income earned from all of these gambling sources in taxable. Moreover it also includes the income that you earn through fair market value of prizes. So whatever the source of gambling income you have, there is a need to report it on tax returns. If you are a gambler and often earn through this, then the following tips can prove very vital for you to fill the tax returns.
IRS Form W-2G:
Whenever you win through any gambling game, you receive a form W-2G from the payer. This form is basically used to report the gambling income that you have just earned. You have to forward this form for the tax return purpose. Usually the payer will give you this IRS Form W-2G. Moreover the payer can also give you this form if you have earnings from federal income. More explained here.
What are the ways to report gambling income?
Some people think that they are required to report only for those incomes that are mentioned on the form W-2G but this conception is wrong. You are supposed to report all the incomes whether they are mentioned on the forms 1099 + W-2G or not. An individual is required to report gambling income as well as the winning on federal income tax return.
If you don’t receive a form W-2G then simply use the form that is used to for income earned through wages. On the other side casual gamblers are required to mention the winning income under the head Other Income of USA form 1040.
Losses on tax return:
There is a Schedule A that you can use to deduct your gambling losses. For this purpose you have you are required to mention your winnings an losses separately. Moreover the deductible amount is limited to the amount of winnings. Also remember that by just taking the difference of your income and losses, you can’t reduce your winnings.
Keep documentation of gambling activity:
For the gamblers, its compulsory that they keep the record of their gambling income. There are different ways to keep this record such as keep all the tickets, receipts and other statements safe. Apart from this, keep the separate record of your losses and don’t mix it up with the winnings.
In short, you can report your gamble winning for tax return. The method is very simple such as you just have to fill a form for it. But for this purpose keep an accurate record of your winning and losses.
Read more in our featured post here: http://www.gws-cpa.com/ways-spend-tax-refunds/