Are Gambling Winnings Taxable In Louisiana

If you gamble, you may not feel like as much of a winner come tax season next year. Changes in the State of Oklahoma tax law a limiting how much you can write off as a 'loss.'

The income tax rate is 24% on all types of gambling profits, but there are certain sources of these winnings that are automatically subject to withholding tax. Follow the IRS guidelines to have a preset percentage taken out of your winnings. Gambling losses are indeed tax deductible, but only to the extent of your winnings and requires you to report all the money you win as taxable income on your return. The deduction is only available if you itemize your deductions. If you claim the standard deduction, then you can't reduce your tax by your gambling losses. “Taxpayers can deduct gambling losses only up to the amount of their gambling winnings,” says Leddy, “and only if they itemize their deductions.” For example, if your gambling winnings totaled $5,000 in the tax year, but you lost $6,000, you can only deduct $5,000 of those losses. These states’ income taxes are written so that taxpayers pay based (generally) on their federal Adjusted Gross Income (AGI). AGI includes gambling winnings but does not include gambling losses. Thus, a taxpayer who has (say) $100,000 of gambling winnings and $100,000 of gambling losses will owe state income tax on the phantom gambling winnings. However, while that form is only issued for “Certain Gambling Winnings,” the tax code requires all winnings to be reported. All winnings from gambling activities must be included when computing the deductible gambling losses, which is generally always an issue in a gambling loss audit.

'I see this for Oklahoman's as like the gambling penalty,' said Eileen Robinson, the head accountant at Gardner's Tax Services Inc.

In previous years, you could write off your total gambling losses in your adjusted income which is what you can still do for federal taxes, but for Oklahoma state taxes, you can't do that anymore.

'For federal you have to show in the income on the 1040, your schedule 'A' is where you take your itemized deductions and that's where you right off your gambling losses,' Robinson said. 'In Oklahoma, they limited the amount of itemized deductions you can take, you can take all of your donations but it limits the rest of it to that 17,000.'

This means you'll have to pay income tax for the total amount of big jackpots.

In the past, if you lost money while gambling, then won, you could deduct those losses from your winnings then only pay the tax on the difference.

'Now when you win that money you're going to have to pay the taxes whether you out that money back into the machine or not,' Robinson said.

Something that Robinson says has been an unpleasant surprise for her clients this year.

'They're in shock, most of them didn't know and of course not until we got ready to do their taxes,' Robinson explains.

It may be too late to make the adjustment this year, but there are ways to prepare for the tax change next season.

'I'd say 5% of all their winnings needs to be set aside to send in' Robinson said. 'So lets say if you won something you need to make sure you set back enough to be able to pay the taxes for the state and try not to plug that into the machine.'

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Gaming Income

Do you need to pay taxes on your gambling winnings? Yes. Gaming income is taxable like any other income you receive throughout the year. Whether or not you receive a W-2G from the casino, it is your responsibility to report “earned” winnings on your personal income tax form. As it does for land-based gamblers, the same applies to online casino players.

Casinos do not issue a W-2G form unless your jackpot is $1,200 or more. The operator is not required to issue a W-2G if your winnings are under $1,200. If you play real money keno, you won’t be issued a W-2G form until you generate $1,500 or more in keno winnings per play. Poker players need to fill out a W-2G form if they win $5,000 or more from a tournament.

As readers can see, each gambling game has its own threshold for reporting taxes. The responsibility is with you and not the casino, though, so if an operator doesn’t give you a W-2G form, you still have to report your winnings. Any cash you win is reportable.

When you win a large sum of money and the casino issues you a W-2G form, remember they automatically send a copy to the IRS. If you don’t report those winnings, you’ll be notified by the IRS that your tax return does not match their records. Report your winnings.

For those filling out a form in 2019 for a 2018 return, note that gross gaming income is reported on Form 1040, Schedule 1, Line 21 under “other income”.

All the following forms of income from gambling need to be reported.

Online Casino Games

Online Slot Machines

Specialty & Lottery Games

Sports Books

Online Card Rooms

Mobile Casino GamesGames

Can Online Gamblers Report Net Winnings?

People often ask if they can report their net winnings – that is, the gross winnings minus their gaming losses. The answer is “No”. Place your gross winnings on line 21 of the tax return. Later, you’ll record your gaming losses for the year.

No matter what your losses for the year, line 21 only deals with winnings. Example: If you win $2,000 throughout the year playing online keno, you report that on line 21 whether you lost $200 or $20,000 playing keno.

Whether through oversight or bad practices, sometimes you might not receive a W-2G report from a gaming operator. If you don’t receive a W-2G, then you’ll have to keep track of your gross income number and report that amount to the IRS.

Gaming Losses

Gaming losses are reported on Schedule A (the itemized deductions) of the 1040 form, line 16, under the category “Other Itemized Deductions”. Once again, maintain a gaming diary or other running tally of your losses throughout the year if you want to legally deduct your gaming losses.

People ask us ways to lower the house edge at online casinos. I can think of no example which lowers your house edge more than keeping an accurate game log and deducting your losses.

One thing to keep in mind: a player’s gaming losses cannot exceed their winnings in a year’s time. If you win $1,000 and lost $2,000 over the course of a year, you report $1,000 in earnings and $1,000 in losses, even if your losses are higher than that. Also, you can’t carry losses forward to the next year. They’re simply lost.

Taxpayers are reporting that the 2018 Tax Cut and Jobs Act has reduced their eligibility for itemized deductions. This eliminates the need for a Schedule A form, but also eliminates a place to deduct gaming losses. Each taxpayer faces their own situation, but many may not be able to shelter gaming income because of the new minimal gaming losses law.

To claim winnings and losses, it is incumbent for you to keep a diary or gaming log. Since you might not know how this is done properly, let’s take a look at what is required.

• When – The type of specific wager and the date it happened
• Where – The name and address of the gaming establishment, or its online equivalent
• How Much – The amounts won and the amounts lost

The IRS recommends players keep supporting documentation for their tax claims. Keep bank statements, credit card statements, monthly online gaming site reports, and other game tickets you might have. Even if you don’t use bank wire transfers or other bank-related online payment methods, bank statements help you substantiate losses by showing corresponding ATM withdrawals and the like.

In the case of online casino gaming, it shows you moving money to a credit card, e-wallet, or crypto-currency wallet. Many land-based players keep their wins and losses on a player’s card or slots card. Online casino players have a cashier page. Also, sites with player rewards have a running tally of winnings and losses, so printouts of VIP program’s reports also help establish your numbers. Ask for your online casino to make a report of pertinent tax information.

Tips for Withholding Taxes

Are Gambling Winnings Taxable In Louisiana Casinos

The team at OnlineUnitedStatesCasinos recommends the following tips for withholding taxes.

1. Deducting Taxes at the Time of Winning

   Many gamblers prefer to have their taxes deducted from earnings at the time they have winnings. If you have earnings reported on a W-2G form, you can choose to have the taxes deducted at that time to avoid a big tax bill when you file your personal tax return. Consider this option if you tend to spend your winnings throughout the year.

2. Making an Estimated Tax Payments

   Players who win in smaller increments and don’t have winnings reported on a W-2G form have the option of making an estimated tax payment based on the taxes you predict you’ll need to pay. To make an estimated tax payment, you’ll need to use a 1040-ES form.

3. Pay On Time – Avoid Penalties

   Underpayment of income tax might result in penalties and interest being charged, so make timely payments to avoid further tax liabilities. A tax return has many factors which determine whether you owe a penalty, but paying into the system as you go is often the better choice for taxpayers.

Are Gambling Winnings Taxable In Louisiana Unemployment

Professional Gamblers’ Tax Returns

Professional gamblers face a different situation than amateur players or even high rollers do. A professional player is viewed as engaging in business, so their earnings go on a Schedule C part of a 1040 form.

While online casino gamers do not consider themselves professionals as often online poker players or sports handicappers, it’s important that those who do should file the proper tax returns. Also, the advice below applies to any professional online gambler.

• A professional gambler pursues gaming full time and with great regularity. The professional gambler makes a good faith effort to generate income for a livelihood. Their gaming is no hobby.
• Someone claiming to be a pro gambler has the burden of proof to make that claim.
• One’s approach to gambling is considered. Does a person make a studied approach to gambling, forecasting the trends and opportunities as one would in a regular business environment?
• The recreational nature of gambling is compared to the for-profit aspect of gambling. Is the player more focused on profit’s or recreation?
• The gambler’s skill and expertise are considered, much like one would for any other profession. Does the gambler produce consistent results? How many years of experience does a professional gambler have?
• The amount of time and effort a player puts toward the profession is considered. Does a gambler spend full-time hours on their gaming activities?
• The history of losses with respect to activity is considered. Overall success thus becomes a major component of evaluation — in fact, the key part of the evaluation.
• Once again, the amount of accounting and record-keeping is a key determining factor. Is the player methodical in their approach?

Are Gambling Winnings Taxable In Louisiana State

Are Gambling Winnings Taxable In Louisiana Lottery

Declaring oneself a professional gambler has several advantages when filing a tax return.

• Deducting gambling losses – First, filling out a return as a professional helps a player deduct gambling losses. Such deductions largely have been eliminated for amateur players for 2018-2019 returns and beyond.
• Gaming as a business – Second, because the pro player treats their gaming sessions like a business, it also allows the player to deduct normal business expenses that further their professional career.

When playing online, expenses might include computer expenses, Internet service fees, research materials, and office supplies. If you have to travel for your gaming profession, then travel expenses, hotel rooms, business-related meals, and telephone bills might come into play. Anyone wanting to claim these expenses should document their expenses and keep the proper receipts.

One major drawback of reporting net gaming profit on a Schedule C form is the income is subject to self-employment taxes (in addition to normal income taxes). Even though a professional gambler will be able to claim additional expenses, the tradeoff might not be worth it. Analyze both possibilities (professional v. non-professional) before filing your return.

IRS Resources for Gamblers

To read more about filing a tax return as an online gambler, go to the IRS websites to review their 2018-2019 publications related to gaming income. Read the current literature because the laws have changed significantly in the past two years.

These are some of the suggested IRS resources players should review when it comes to their taxes.

• Publication 525: Taxable and Nontaxable Income – Covers gaming income and winnings.
• Publication 529: Miscellaneous Deductions – Involves gaming losses and proper documentation
• Publication 505: Tax Withholding and Estimated Tax – As the name states, involves tax withholding and estimated taxes.
• Publication 4706: You Won! What Now? – Informational brochure for individuals with information on reporting gambling winnings.

About Kim Walker – CPA

Kim Walker is a Certified Public Accountant residing in Las Vegas, Nevada. Her areas of concentration are small business owners and their specific accounting and tax needs.

Services include business and personal tax return preparation, entity selection and business startups, business plan development, and IRS problem resolution and bookkeeping. You can inquire about her tax services by visiting her website.