August 21, 2017

Tax Liability On Gambling Wins

Online casinos are the source of biggest jackpots and prizes, and so, often a question arises in every player’s mind: is it necessary to pay taxes on the winning, or they can avoid taxes by hiding their winnings from tax authorities? Actually, this question is more comprehensive than it looks, first, taxation laws are different in every part of the world, perhaps, not every country counts online gambling as a legitimated source of income, and so; they take it as an illegal sourced income. Generally, tax liability is not affected to the legality of any income; hence every gambling win has to be taxed no matter whether it’s considered as a legal source of income or out of an illegal activity.

The important aspect to know about tax liability on gambling income is: how player’s local laws allow them to declare their winnings? Some places charge tax on gambling activities at 33%, while other may go up to 50%. Further, another aspect is whether a tax is levied on net casino income, or it’s grossly taxed, i.e., whether a player can deduct his losses out of winnings to come out with a net winning amount. This is allowed most of the time, but subject to certain conditions. Normally, there’s a limit to deduct any loss out of a winning amount that allows every player to report only net winnings as his chargeable income. However, the applicable deductions are only limited, i.e., if a player won $10000 on his $500 bet, he has to declare his net chargeable as $9500.

 

Can I hide My Gambling Incomes?

Every player, generally, thinks how tax authorities come to know whether a player has won something or not. Actually, it’s very simple; if you understand how money travels from a casino’s account to your bank account and vice versa. All gambling money transactions are done through banking channels, and every transaction also has a unique transaction code with its amount, date, and destined place. So, federal or other government auditors can easily scan each and every banking transaction with their auditing software to find out all the transactions happened in a financial year. They later compare these figures to the figures returned by all the taxpayers, and if they found a considerable difference, they scrutinize it further to find out the final culprit. So, hiding your gambling income is not a viable choice, coz there are heavy penalties on failure to return the accurate winning amount in any financial year.

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