A common question for consumers completing a tax return is whether or not gambling winnings are taxable, and how such winnings would be reported on the return. In most all circumstances, money won from gambling is fully taxable and must be reported on tax returns.
In fact, sometimes the payer of gambling winnings might provide a Form W-2G and have federal income taxes withheld from the winnings. Gambling income ranges from lottery winnings, raffle, horse and dog races and casinos. The people that win on “The Price is Right” will probably face some hefty taxes as well, as cars, houses, trips and other noncash prizes are usually taxed at their fair market value.
The full amount of gambling winnings must be reported on Form 1040, line 21, regardless of the amount of whether the payer provided a W-2G form. Gamblers may also be able to deduct their losses if they are not more than winnings.
Keeping receipts and other statements documenting winnings and losses is important, as they are required by the IRS.
Free tax software like TaxACT can help taxpayers navigate through the confusing federal and state tax codes so that returns are guaranteed accurate.
This entry is for information only and does not constitute tax advice, nor does it serve as legal advice. There is no intent to create, nor does this blog site constitute, a professional tax practitioner/client relationship. You need to consult with your tax professional prior to acting on any item of information you learn on this site.
Tax laws change from time to time, and are different in various locations.
With a one in a million chance of winning a few thousand dollars force you to keep all your receipts? The Hungarian government is hoping that it is. If it goes as planned, the government’s new “receipt lottery” system, which basically makes every receipt for everyday transactions into a de facto lottery ticket, will give its citizens reason enough to get their receipts organized.
To encourage consumer to ask for and collect proper invoices for their purchases, the Hungarian government is rolling out a “receipt lottery” in the early months of 2009. Participating consumers will collect receipts from everyday purchases and submit them for the lottery, where they will have chances to win Ft 1 million (about $5400). Submissions can be made online or by text message. Every month, ten winners will win the drawing.
With this program, the Hungarian government is trying to increase consumer demand for proper records of transactions. In turn, companies would be less likely to keep transactions off the books. Improper documentation by retailers has led to widespread evasion of value-added taxes, which costs the government a considerable amount of money every year in lost revenue.
Members of the political opposition are not happy with the new program, which is called számlatombola. They claim that the lottery program is “infantile” and would prefer more concrete economic policies and government enforcement to encourage proper record keeping. It is also possible that the enforcement of a value-added tax will just lead to higher prices for consumers, adding to inflation. There have been similar programs, however, in Japan, Croatia and Taiwan that have been successful.
There are plenty of good reasons to save receipts, but in Taiwan, you can actually get paid cold, hard cash for saving receipts you get from retailers.
Forget reimbursements, taxes, budgeting and insurance. I want the cash. So if I ever move to Taiwan, I am definitely going to participate. Here’s how it works:
In order to encourage people to ask for receipts from retailers, all receipts are printed with special number codes. Every so often, the government releases lists of numbers. If they match the ones that you have on your receipts, you can win money.
Big props to Taiwan. I smell a Shoeboxed partnership!