- Online Casino Winnings Taxes
- Online Casino Winnings And Taxes
- Online Casino Winnings Taxes Refund
- Online Casino Winnings Taxes Online
- Online Casino Winnings Taxes Calculator
Reporting Casino Winnings. Your tax return must contain all your casino winnings. This is necessary to avoid clashes with the IRS because online gambling income is part of your total income. In other words, your (job income + gambling income + other incomes = total income).
And yes, I claim my winnings on my tax return. Several individuals have asked me to give an overview of online gambling and taxes. Given the out-and-out lies and falsehoods that I see on the Internet, I’m going to present an in-depth guide to online gambling and taxes in the USA. Disclaimer: We are not providing legal or tax advice here. Depending on the type and amount of your winnings, the payer might provide you with a Form W-2G and may have withheld federal income taxes from the payment. The full amount of your gambling winnings for the year must be reported on line 21 of IRS Form 1040. Your gambling winnings are generally subject to a flat 24% tax. However, for the following sources listed below, gambling winnings over $5,000 will be subject to income tax withholding: Any sweepstakes, lottery, or wagering pool (this can include payments made to the winner (s) of poker tournaments).
All countries and governments have their own online gambling tax policies and legislation so we need to look at this question from a global perspective. Firstly we’ll cover the situation in the UK and following that look at how things may differ in the rest of the world.
Do you have to pay tax on your gambling winnings?
Online Casino Winnings Taxes
UK Gambling Taxes
Key Points
- All winnings either online or offline are tax free!
- Any betting tax abolished in 2001 by Gordon Brown.
- Tax used to be on bookies but they passed to punters.
- Bookmakers must now pay 15% POI tax but not punters.
- POI tax on any games of chance increased from 15% to 21% but again not for punters.
In the UK any and all winnings from gambling – either online or at betting shops – are entirely tax free and do not need to be declared as part of any tax return.
This has been the case since the then Chancellor of the Exchequer Gordon Brown’s budget of 2001, when he abolished Betting Duty which had stood at 6.75%. That duty was removed in an attempt to persuade bookmakers not to move their operations overseas and therefore take jobs and revenue away from the UK economy.
All of that is not to say that there is no tax involved when it comes to gambling in the UK, however, and there is a ‘point of consumption’ tax related to the activity. This does not affect punters themselves, though, and will be dealt with separately further down this page.
Will the situation ever change? Generally speaking there is little chance that this situation will be reversed, either, as the UK tax system is simply not built in such a way that taxing gambling winnings would be viable. This is the case as it is fairly standard within the system that if tax is levied on the income or profit made through an activity, then there must also be an allowance made against losses through the same activity.
Online Casino Winnings And Taxes
With gambling being an activity where overall more losses are made by punters than winnings, therefore, such a change in the tax legislation would cost the UK government revenue. As a result, it is quite simply not something which would be considered. Your betting, casino, slot machine, poker and bingo winnings are yours to keep tax free.
What About Professional Gamblers?
It may seem logical that the tax situation would be different for professional gamblers than it is for occasional punters. When it comes to pure winnings from betting, however, that quite simply is not the case. As we have discussed above these winnings are not taxable and this remains true even for a ‘professional gambler’. That is because HMRC do not recognise professional gambling as a taxable trade.
In fact, within their most up to date ‘Business Income Manual’, HMRC clearly define their position on professional gambling:
‘The fact that a taxpayer has a system by which they place their bets, or that they are sufficiently successful to earn a living by gambling does not make their activities a trade.’ BIM22017
Gambling winnings, therefore, remain free of tax regardless of whether they make up an individual’s main source of income. Where the situation can get a little more complicated, however, is in the case of income related to gambling but not actually direct winnings from gambling. Appearance fees paid to poker players for playing at certain tournaments, for instance, represent payment for a service provided to the tournament organisers and as such may be taxable.
Away from the UK, too, tax laws and legislation do differ and it would benefit a professional gambler outside of the UK to research the specific rules and regulations within their own country.
UK Point of Consumption Tax
As we mentioned earlier, Betting Duty for gamblers was abolished in 2001 and was at that time replaced by a 15% tax on gross profits for bookmakers and gambling providers. That tax was initially charged on a ‘point of supply’ basis, meaning that if the bookmaker or company were not based in the UK, then they were not liable. This situation has more recently changed, however.
From the latter part of 2014, the tax on bookmakers’ profits was changed to a ‘point of consumption’ tax by a combination of the Gambling (Licensing and Advertising) Act 2014 and by the introduction of ‘Remote Gaming Duty’. This means that regardless of where they themselves are based, providers must pay a 15% duty on any bets placed by UK customers.
In the 2018 budget chancellor George Osborne announced that the point of consumption tax would rise from 15% up to 21% for all games of chance but sports betting would remain at 15%, for now.
Gambling Taxes In The Rest Of The World
| Country | Taxes |
|---|---|
| Austria | No |
| Australia | No |
| Australia | No |
| Belgium | No |
| Bulgaria | No |
| Canada | No |
| Czech Republic | No |
| Denmark | No |
| Finland | No |
| France | 2% on poker cash pots, 7.5% on sports (+1.8% levy) and 7.5% on horse racing (+8% levy) |
| Germany | No |
| Greece | No except lottery at 10% |
| Hungary | No |
| Ireland | Bookies pay 1% on all bets – not winnings. |
| Italy | No |
| Kenya | No – bookies must pay 7.5% on their winnings. |
| Latvia | 25% |
| Luxembourg | No |
| Macau | 40% |
| Malta | No |
| Nigeria | 20% |
| Netherlands | No expect lottery at 29% above €454 |
| Portugal | No expect lottery at up to 35% |
| Romania | 1% up to 66,750 RON, additional 16% of surpassing margin up to 445,000, additional 25% of surpassing margin over 445,000 RON |
| Slovenia | No expect lottery at 50% if more than €4,000 |
| Spain | No but must declare winnings as income for taxation |
| Sweden | No |
| South Africa | No except 6% on horse racing. |
| UK | No |
| USA | 25% |
As the above table shows, where various types of gambling are legal there are a variety of different attitudes towards taxation on winnings from those forms of betting. If your country is not listed then it’s likely gambling is not strictly legal and there is therefore no taxation laws.
Are online gambling winnings taxable? Yes, whether you gamble at land-based or online casinos, the money you earn is subject to federal income tax. Known as gambling income, the money you earn from wagers and bets as well as lotteries, sweepstakes, etc. all must be taxed.
In some cases, you will be provided with tax forms that must be turned in to the federal government. The full amount of the gambling income minus the cost of the winning bet will be included on this form. Whether you receive this form or not, it’s important to know your responsibilities when it comes to filing income taxes.
The process of handling gambling taxes is not difficult if you know what to do. With this in mind, the OUSC team created this quicktax guide to help US players report their online gambling income.
Do US Players Have To Pay Taxes For Online Gambling?
So, if you enjoy online gambling at sites like BetOnline or Bovada Casino, do you have to pay taxes? When you choose to gamble online, the money you earn is still taxable. Even if the site is located in another country, you still have to pay taxes.
Online gambling is unregulated in most regions of the US, but taxes must still be paid. Just because you do not receive tax forms, does not mean that your winnings are not taxed.
To the IRS, it does not matter where the money is either. If you have funds in your online casino account, even if it’s an offshore site, it’s taxable. When dealing with online gambling earnings, it’s important to review this information with an accountant to ensure you pay the right amount of taxes owed.
Below you will find a list of gambling activities that the International Revenue Service considers taxable:
- Prizes
- Private Party Games
- Tournaments
- Scratch Off Tickets
- Other
How Do You Report Gambling Winnings?
The way you report your gambling activities will be dependent on how you win. If you receive a Form W-2G, then this is what you will turn in when filing taxes. Taxes must be filed before April 15th or you must ask for an extension. You will turn this form in as you do your other tax forms for employment to an accountant or tax filing company.
If you do not receive the W-2G form, then you will need to fill out a Form 1040, adding the winnings to Line 21 of the form. The full amount of gambling winnings will be placed on this line.
When filling out the 1040, you will need to configure your losses as well. The expense you had for bets, wagers, etc. will need to be deducted as an itemized deduction. This is done on the “Other Miscellaneous Deductions” line of Schedule A form. This will help to lower the tax amount paid on your total gambling income.
Online Casino Winnings Taxes Refund
What Types of Records Do You Need?
The information you record while enjoying online gambling can be used during the filing process. It’s important to maintain a log or diary of all your losses and winnings. Keep in mind the following information:
- Dates: You will need to record the date and type of activity completed, including wagers and winnings.
- Location: List the name and location of the gambling facility. In the case of online gambling, this would be the website, such as MyBookie or Café Casino.
- Checks: If you are sent any checks in the mail from winnings, be sure to keep the check stub.
- Paperwork: For some players, winnings will be sent via mail and any paperwork should be kept and used during filing as needed.
Online Casino Winnings Taxes Online
Don’t Forget To Pay Your Online Gambling Taxes
Online Casino Winnings Taxes Calculator
When you gamble online, it is important to enjoy yourself, but also remember to file your winnings! The IRS takes gambling money very seriously and you want to be sure that you pay your taxes accordingly. If you need any additional information, be sure to visit the official website of the IRS to find all the previously mentioned forms you will need fo file your taxes.