When it comes to any form of gambling, taxes are definitely an important subject that deserves a little bit of thought from the average gambler. Most people assume that since wagers take place in cyberspace or inside a traditional casino that there is no real reason to report it as income, but it is important to remember that governments seem to have a knack for finding these types of things out. Taxes should also be paid on income or gifts obtained from casino loyalty programs as well since these forms of payment are usually reported by the gaming business itself.
Taxes are a Big Deal
To give you an example of how serious a simple tax issue can become, let’s take a quick look at one of the most famous gangsters to ever walk the streets inside the United States. His name was Al Capone, a Brooklyn-born immigrant who sought out a life in street gangs at an early age in the early 1900′s. By 1925, Capone was in charge of almost the entire crime syndicate throughout Chicago and the northern states, never hesitating to resort to any level of violence in order to prove his supremacy. Although this famous gangster was arrested and held for trial numerous times throughout his six year reign of power, witnesses always seemed to disappear, move away, or end up in a shallow grave.
The FBI and the US Attorney’s office was so tired of watching Capone walk free that in 1931 they decided to pursue him from a new angle; tax evasion. Although his vast wealth could never be directly linked to criminal activity, it was relatively easy for prosecutors to prove that this Mafia mastermind had not paid taxes on income, which earned him an eleven year prison sentence and ended his leadership role in one of the largest organized crime syndicates to ever hit the USA. If unpaid taxes can take down a crime-lord of this capacity, then it’s probably a good idea for you to stay current on payments to your government.
Taxes and Gambling
Most countries tax all forms of domestic income, which means that gamblers are required to pay tax on any winnings they have accumulated over the course of the year. Now, that doesn’t mean that just because you collect $3,000 on blackjack one day that you would owe taxes on that entire amount, because you’d be able to deduct all of your losses from the calendar against that amount. Since professional gambling is considered a form of self-employment in many regions, things like travel costs and lodging inside casinos may also be tax deductible.
There is a little loophole when it comes to online gambling, however, because many regions do not collect tax on income that is earned from outside the country. As long as your winnings are not deposited directly into your home territory’s banking account from the online casino, there is a chance that it will not be considered taxable in some areas.
Taxes on Casino Loyalty Programs
All casinos are taxed heavily from their respective government, which means that they look for any tax break that they can find. Loyalty rewards and perks actually fall under a form of marketing so these amounts are 100% tax deductible in most regions. In most cases, the casino that gave you various freebies will report it to their government with your name attached, so if you live inside the same country as the casino then you’d better report it as a form of income.
If you live in a separate country from where the casino is located, then you may or may not have to pay taxes on your loyalty rewards. In any case, all professional gamblers should have their taxes completed by an accountant with experience in international law (if applicable) and miscellaneous income.