Gambling winnings?
Hi everyone. I signed up for a online casino offering a bonus & i got it. It was a $100 bonus (for the sportsbook section, i converted it to casino credit for a .5/1 ratio – they offer this). I then took that $50 into blackjack and played over and over. Hitting a high of $300, but probably wagering $5000, and "winning" $4990 over the course of an hour (via $5, $10, $25, & $50 hands). But I would win 1 hand, get $20, then bet using the winnings and lose that. I essentially just 'recycled' the same money playing over and over. I came out with nothing (but also only deposited $10 of my own money). Will I owe taxes on this?
Freaking TF out, bc I think i may have just created a massive tax liability for myself. I didnt withdrawl anything. I use the standard deduction so I cant itemize losses
Gambling winnings never withdrawn- freaking out! Did i just create a huge tax liability for myself?
byu/Adventurous-Lie145 intax
Posted by Adventurous-Lie145
7 Comments
You lost $10. Losing $10 is not income. You do not owe tax on gambling and losing.
Yes you will unless you itemize. Winnings are all taxable. Losses are deductible but only if you itemize which means you will not be able to take the standard deduction. It is possible you have other itemizable deductions that will recover some of the lost standard deduction, but we don’t know that. And if you live in the states that don’t allow losses against winnings for the state income tax return you will lose there also.
Chances are yes. Your winnings are winnings, you have the choice to withdraw or play again, so the IRS generally doesn’t care if you every turned it into non-casino cash.
You can even these loses out with deductions, assuming you can extract the records from the casino, but you will have to itemize. If you won and lost more than the standard deduction, this is what is the better course of action. But to truly make your winnings tax-neutral, you need to replace the lost standardized deduction amount with other deductions like mortgage interest, state and property taxes, etc.
Generally, the worst-case scenario is that you now have to pay taxes on $15K (if single) of income that you wouldn’t have to if you hadn’t gambled (or had set aside taxes from winnings).
Did you do all of your gambling in one sitting or did you do this over some period of hours/days? Was this your only gambling activity for the year? If it was all on the same app, playing the same casino game (not sports betting), over one hour (that was my take away from the OP, but I’m not 100% on that) there’s probably a good argument that was one session in which you can net your winnings and losses to come up with your income for that session – no itemized deduction needed. Google “gambling session method.”
Do they have your tax ID#? They they would issue a 1099 above a certain threshold.
Look up session reporting. Basically you net together all of your winnings and losses by wager type per day. But if you do it this way you have to consistently do it and everything has to be tracked by the casino (which it most assuredly is since it’s online)
It was one session so you should be fine.