If you are a serious gamer for whom gambling can bring not only good enterntainment but also some income, you must be aware of tax implications for your winnings and losses. This is because Uncle Sam is looking at you and wants his cut from any income you earn from the gambling industry. It does not matter what kind of payment methods you use (which can depent on the country you come from, for example, according to Nowegian CasinoHex, Norwegian gamblers are able to use a limited number of payment methods for casino payments). Tax system can also vary from country to country. Anyway you can be smart enough to declare your losses from gambling so as to adjust them against your taxable income, but you will also need to report your winnings. You can adjust your losses only against your winnings. It is not possible to reduce your taxes by claiming gambling losses.
Even for claiming deductions for your gambling losses, you are required by the IRS to keep a complete log of your winnings and losses. For example, if your winnings in a financial year are $6,000 and your gambling losses are $8,000, you can only get deductions for $6,000, the amount of your winnings.
The IRS
The IRS does not stop you from reporting your gambling losses. But you cannot claim deductions on losses that are more than your winnings. Deductions or not, make sure you report all your winnings and losses from gambling activities in any given financial year.
(Source: thestreet.com)
If you happen to be a citizen of UK, you are in luck as your winnings and losses are not subject to any tax. If you cannot claim any tax deductions against losses, there is no need to worry as tax people are not interested in your winnings either. It does not mean government in UK does not get its share from the operation of casinos and betting industry. Government charges tax at the rate of 15% on the revenue earned by these operators.
In Netherlands, the government imposes a very steep rate of 29% tax on casinos’ revenues. Casinos have to pay an additional 1.5% tax to the gaming authority. Even players are asked to report their winnings and losses and taxed at the rate of 29% on their winnings.
In Sweden, which is famous for its gambling industry, tax is imposed at a rate of 18%, 3% more than UK. In addition, there is also the requirement of securing license for operating a casino. It can cost casino operators anything form Euro 6,000 to Euro 70,000. Players are not asked to pay any taxes on their winnings.
In Norway applies the rule that all winnings of NOK 10,000 (approximately EUR 1,000) or less are tax-free. A tax rate for winnings that exceed EUR 1,000 is 28%.
In Europe, Greece is perhaps the worst place for casino operators. They are made to pay a whopping 35% tax on their revenues in addition to paying huge money on securing licenses.
If you have won money from a physical or online casino, make sure you do not spend every single penny because you owe a certain percentage of this amount to Uncle Sam in the form of tax. Remember, you have to report all your winnings to the IRS when filing your income tax returns. You cannot hide your winnings and report only the losses in a bid to claim deductions. In any case, you are not entitled to deductions against gambling losses if you are already claiming standard deductions.
