#69: Gambling + Taxes (say what?)

Fusing the excitement of gambling with the precision of tax planning, hosts Chris Piccuirro and John Tripolsky navigate the complexities of one's obligations to the IRS following those auspicious wins or painfully remembered losses. Both Piccuirro and Tripolsky pepper their discussion with humor and relatable anecdotes that easily resonate with their audience. This episode especially appeals to listeners eyeing the upcoming Super Bowl, the biggest betting event of the year, and those curious about the tax impact of their potential gambling earnings.Driven by the rapid increase in online and app-based wagering, the duo sheds light on the critical aspects of gambling wins and losses and the importance of honest reporting. They unpack the intricacies of federal and state tax regulations, emphasizing the significance of obtaining W-2G forms when required and understanding how winnings - both cash and non-cash - are taxed differently. Additionally, they emphasize the crucial nature of record-keeping to ensure compliance and protect against potential audits.Key Takeaways:Gambling income, be it from legal or illegal activities, must be reported to the IRS by U.S. residents, regardless of where it was earned globally.Losses can be deducted up to the amount of winnings, but only if you itemize your deductions on your federal tax return.Accurate record-keeping of gambling activities is vital for claiming losses and proving the case in an IRS audit.Non-cash wins are also taxable based on their fair market value and must be reported accordingly.It's not only about the federal tax; state and local tax implications also come into play, and understanding these nuances is critical for accurate tax reporting.
Notable Quotes:"IRS considers all gambling winnings as taxable...regardless of if they come from legal or illegal gambling activities.""You can deduct your gambling losses up to the amount of gambling wins if you itemize your deduction on the federal return.""Proper record keeping is essential when you're dealing with gambling income and deductions.""You could actually be paying taxes on gambling winnings, even if you end up with an overall gambling loss for the year.""If you win a non-cash prize...such as a car, vacation package, or other goods, the fair market value is considered taxable income and must be reported to the IRS."
Resources:Episode #13: Itemized vs. Standard Deduction
Episode Sponsor:
REPStrackerwww.repstracker.com/affiliate/teachingtaxflow (CODE: IFG)