A lot of people have to file their taxes every year. This is a mandatory requirement by the US government. They must report their earning and expenditure, and submit slips and receipts as proof.
The US government is very strict about its taxation laws.
Companies and individuals alike are required to pay their debt to society or face persecution. The IRS agency is responsible for overseeing any issues, aspects and matters having to do with taxation.
They employ some of the brightest statistics and mathematical minds. Therefore, it is very hard to scam or con your way out of not paying your taxes. So let’s look at how to use gambling losses as a tax deduction.
People gamble to win. They never gamble to lose; however in either case they have to report such on our tax forms.
Gambling is a Trillion Dollar Industry
Millions upon billions of dollars are generated annually from gambling practices. Owners of gambling establishments are multimillionaires just because of this. Some governments are run from the revenue generated from gambling.
In every walk of life, people gamble; whether it is using lotteries, horse racing, card games, or sports, millions of people gamble. These millions of people, especially if they win must pay Taxes on their earnings.
Withholding taxes, and other types, are monitored by the IRS and other tax departments in different countries.
Use Gambling Losses as a Tax Deduction
In the USA, the gambling establishments record your winnings and document it on a W-2G form. This is then passed on to the IRS. You will also be given a copy for your own records. Now you can benefit somewhat from your tax reports or you can lose big.
Ensure to have accurate records and deduct everything.
All slips, receipts and other gambling documentation should be filed until needed to do your Taxes in that year. You can prepare a journal of your activities if you so choose. This will make it easy to keep track of information you may forget weeks or months down the line.
When you collect the IRS Form 1040, list out all your losses and earnings, but remember you will not be able to claim more than you have won.
You will make these notifications on Schedule A. Replicate any information that may be on the W-2G forms given to you by gaming institutions. If you have won any money or items you will be required to indicate the value. If you don’t know the value, research the fair market value of a similar item and use that amount.
On the IRS form, you will place specific information certain sections.
Any winnings, you will declare on line21 of the form, including those stated on the W-2G form. If taxes were withheld by the gambling institution, you will again refer to the form and enter this amount on line 64. Indicate your losses on line 27.
If someone else has gotten a piece of your winnings you will indicate this on another form. This is the IRS Form 5754. Ensure that you double check that all the information you have given is indeed correct.
How to Save Money
These listings are by no means comprehensive. So feel free to explore and research more tax information and benefit from greater saving. The IRS website is a great resource; especially as they are the ones auditing your taxes.
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