Category Archives for "Deductions"

Your gambling winnings in 2013 are taxable in 2013

Gambling Winnings in 2013

Money you win in any gambling operation in the USA is taxable. Your gambling winnings in 2013 when you play bingo, blackjack, poker or a video slot machine are no different from any other kinds of income you earn. Report the correct amount on your personal IRS 1040 income tax return.  Gambling winnings are a taxable form of income subject to federal income tax withholding up to 25%. Gaming income includes any form of wagering, from dice to betting on horses in a race.  Casual gamblers are wise to follow some tips from the professional.

  • Report your winnings because, more often than not, the government will receive an income document concerning the wagering transaction. Seek professional assistance when reporting the fair market value of prizes such as cars or trips.  Your gambling winnings are typically reported on IRS Form 1040 Line 21 as “Other Income”.
  • Under some conditions, especially if you can itemize your deductions using Schedule A on your IRS 1040 personal tax return, you can offset your gambling winnings with gambling losses.  Any losses are reported separately as miscellaneous deductions and will offset your winnings. Do not report the difference between your winnings and your losses directly on IRS Form 1040 Line 21 Other Income.
  • Keep accurate records of all your gambling activity as if you were running a business.  Proper documentation includes receipts, tickets, and daily logs of activity including the times you play and the locations of both the machine and the physical location of the store or casino.   Do not depend on Cash In/ Cash Out reports issued by resorts, hotels, or casinos; substantiate the claims of gambling losses with detailed ATM withdrawals or bank records.

Backup tax withholding is calculated at 28%. You do not have to withhold income tax from wagering transactions like bingo, keno, and slot machines, if your winnings are $5,000 or less.  A casino reports your winnings on IRS Form W-2G if the total winnings are $1,200 or more from a bingo game or slot machine.  Keno winnings are reported if they are $1,500 or more.  Your winnings from a poker tournament are reported if they are more than $5,000.

Payments of wagers are made when they are actually (or constructively) paid to the winner.

You must report this form of income on your personal tax return in the year you they are made.  Consider using IRS Form 5754, Statement by Person(s) Receiving Gambling Winnings, if the recipient is not the actual winner or a member of a group of two or more people.

For further information, review IRS Publication 525, Taxable and NonTaxable Income, and IRS Publication 529, Miscellaneous Deductions, or seek professional assistance.


Other 2013 references about reporting gambling winnings and losses:

Reporting Gambling Winnings |
Feb 4, 2013 Check out line 28, “other miscellaneous deductions,” on Schedule A. That’s where you report any gambling losses. You can claim up to the total 

Taxes in the Back » Nonresident Gamblers Take a Step Closer to …
Commissioner that a nonresident gambler may calculate gambling winnings or losses on a per-session basis. To elucidate the practical significance of this holding, the court explained the tax outcomes when applying each …

Tax Topics – Topic 419 Gambling Income and Losses
Apr 1, 2013 The following rules apply to casual gamblers. Gambling winnings are fully taxable and must be reported on your tax return. Gambling income 

Pilarski: Report gambling losses, but the burden of proof is on you …
Feb 12, 2013 QUESTION: I enjoyed your question last week regarding gambling wins and taxes. I have another question regarding my tax liability on a win.

Reporting Gambling Winnings |
Feb 4, 2013 Check out line 28, “other miscellaneous deductions,” on Schedule A. That’s where you report any gambling losses. You can claim up to the total 


What is depreciation?

What is depreciation?  In business, we deduct our expenses from our income.  Business “stuff” we use, deplete, or wear down lowers our revenue and our taxable income.  If the “useful life” of the “stuff” we use to produce income extends beyond one tax year, we need another way to still recover our original cost. This “long-term” method of cost recovery is called depreciation. There are five tests for depreciating property:

  • You must own it.
  • You must use it (place in service) for business or other income-producing activities.
  • You must be able to determine its useful life.
  • The useful life must be greater than one year.
  • It must be qualified property according to IRS rules as stated in IRS Pub 946, How to Depreciate Property.

For property placed in service after 1986, you generally use the Modified Accelerated Cost Recovery System (MACRS).  Prior to 1987, other methods to recover costs, like for example, Accelerated Cost Recovery System (ACRS), were used as detailed in IRS Pub 534, Depreciating Property Placed in Service Before 1987.