Tag: Winnings

  • Roulette Winnings – Handing it the right Way

    An important key to successful roulette is the knowledge on how to handle winnings. This has been one of the many culprits that brought down players to financial disaster.

    Playing roulette is not all about winning money. Although money plays a great deal of motivation among players, the desire to win more has been the consistent passion of greedy players.

    Most players from my experience don’t know when to quit. These players never set limits on the amount they can win or lose every playing day. Winning 10% of your playing capital is good enough.

    Playing once a week is another good example of setting limits of playing base on time. And the most players can play is about 3 hours which is substantial in entertaining oneself. I’ve have seen players waste their precious time by hanging at the casino for 5-8 hours 5 days a week. I’m sure anybody who plays 5 hours a day for 5 days in a week is more hooked to the game with no beneficial outcome it may bring.

    Playing roulette is part of the entertainment business. Entertainment is temporary and not as an ongoing thing like spending so much time and dreaming of winning big money. Just like watching movies which is also part of the entertainment business, it is unlikely that we watch movies 3 times a day. No way will we progress in life if we allot much time in pursuing playing games of chance.

    Taking a cue from the word entertain, players must readily acknowledge that playing roulette is for that purpose only. And making it more what it is intended for defeats its goal as a leisure activity.

    After a decade of being a casino dealer, I have observe that the best thing to do with roulette winnings is responsible gaming. As stated earlier putting a limit on both winnings and losses on every casino visit limits further exposure to financial losses. Time element is also a must, the longest players can stay is an hour. Beyond that is extremely volatile for both physical and psychological aspect of a player.

    In the event players win it is much better to take a route out early. Quitting while one is ahead of the game will surely benefit steady monetary rewards. Keeping your winnings even after a few deals will make a winner out of you. It’s not a crime to quit early.

  • Taxation of Gambling Winnings

    Do you enjoy gambling? Many people find it enjoyable and relaxing to go to a casino and spend time at the slots or tables. A big problem we see as accountants is that most people don’t understand how the winnings affect their tax return. Here are a couple of examples.

    About 25 years ago a good friend of mine called me and told me her elderly parents had gone to Wendover, NV and won $50,000 playing a quarter slot machine. They lived on their Social Security and had not been 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 would have to pay. It turned out they were able to pay the tax and buy a house, but because of the added income, they had to pay taxes on their social security income, which they normally would not have had to do.

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

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

  • Claiming Gambling Losses on Your Tax Return

    If you make any winnings in the gambling, you need to report the full amount of the winnings for the year on line 21 on Form 1040. You can deduct the losses you make from gambling for the year, on line 28 of form 1040 on Schedule A. However, you cannot deduct the losses from gambling which are more than your winnings! Also remember, this facility is not available to the non-resident aliens. They cannot deduct losses on gambling in schedule A.

    In order to claim losses on gambling you need to know certain basic rules of IRS on the subject. Suppose you make a winning in gambling of $1000 and in the same year you make losses of $500, you cannot reduce your winnings by your gambling losses and the report the difference of $500. You have to report the full amount of your winnings as your income and then you can claim losses equal to the amount of winnings as an itemized deduction. So your records for gambling activity should show your winnings separately from your losses.

    In order to claim losses in gambling, you need to keep proper records. You must keep a diary entering details of all the losses and winnings from gambling. The diary should contain the following information

    The date and the type of your wagering activity.
    The location of the gambling establishment indicating the name and address.
    The names of persons present with you at the gambling establishment.
    The amount won or lost.
    The maintenance is just one part of IRS requirements. In addition to the diary you must keep all the related documentation. This can include form W-2G (declaring Winnings from Gambling), Form 5754 (It’s a Statement by person who receives winnings from gambling), tickets for wagering, the credit card records including the bank statements showing withdrawals or receipts, payments slips provided to you by the gaming establishment.

    These records are just suggestive. The tax liability depends on the facts of a particular winning or losing and the related circumstances.

    Keno – the copies of the Keno tickets purchased by you and validated by a gambling establishment, copies of your casino credit records, and copies of your casino check Cashing records are required to be produced for winnings and losses from keno activity.

    Slot machines – If you’re playing on these machines, a record of the machine number and all the winning date and time the machine was played.

    Table games (including blackjack, poker, roulette, wheel of fortune etc) – the number of the table you are playing, Casino credit card details showing the credit issued.

    Bingo – You should keep a record of the games you played, the cost of the tickets purchased and the amounts collected on winning tickets, any receipts from the casino and other relevant records.

    Winnings from racing – a record of races you played, the amount of wagers, the amounts collected on winning tickets and amounts lost on losing tickets need to be produced.

    Winnings from lotteries – a record of tickets purchased, the dates of purchase, winnings and losses are required to be kept. You can also keep unredeemed tickets and payments slips in support of your claim.

    Many people never realize that winnings from gambling are taxable. And those who know it, tend to ignore it. However you should remember that the legal betting options like state lotteries, casinos and horse racing tracks are regulated by government agencies and IRS keeps a close track with these agencies. In fact that is the reason why the bells ring when you hit the slot. They’re shouting that someone is there to report your gambling information to the IRS.

    There are all sorts of financial decisions you take in your life. You make gifts to your children; you make investments and acquire real estate. Do you really know the tax implications of these decisions, which can save you thousands of dollars?