Before we dive in, a quick disclaimer….Hawthorne Casino Insider does NOT provide tax advice or profess any expertise on gambling taxes. You should consult actual tax/legal experts regarding your personal tax situation. ‘Nuf said.
Its Tax Season
As the end of the year nears, for many of us that means it is tax season. While the thrills of legalized gambling in our great state are fresh, we can’t let this excitement distract from our civic duty to pay our fair share. Gambling taxes are part of the game. And that means to the IRS as well as to the Illinois Department of Revenue.
The whole reason behind legalization was to provide a little cash for the coffers of the state in the form of taxes. The biggest portion of those taxes will be paid by the gambling operators, but a chunk of the gambling tax revenue will also come from winning players.
The Online Gambling Tax Advantage
95% of Illinois sports bets have been placed using online accounts. This means there is an easily accessible record of every one of these wagers. The winners are subject to the scrutiny of the tax man.
The state of Illinois considers all gambling winnings to be personal income, taxed at the current flat rate of 4.95% for all residents. If you are lucky enough to win big enough to worry about taxes, make sure you keep records of all your losses as well. You can offset your wins up to the amount you have lost. But don’ try to add on your other expenses like transportation, lodging, drinks, etc. That is a big no-no.
One of the advantages of using an online account(s) is that, in the event of a big score that would catch the eye of the IRS, there will also be a record of all the losing plays. These losses can be deducted from the wins before calculating the tax liability. And remember, the tax liability is cumulative for the year across all accounts.
Playing online, even with multiple accounts at different operators, makes the year-end bookkeeping a lot easier. Each operator that has paid you out will issue a Form W-2G. They will provide that same information to the IRS and the state.
Once the bookkeeping is done, you can then analyze your performance with better accuracy. Remember, its not about what you win, its about what you take home.
