U.S. Gamblers Income Tax Rate!

Golden Roulette Wheel

               In the age of sports betting on football & basketball games, off-track betting on races, betting on card games, & betting electronically or manually, it is essential for the gambler that wins income to know that their winnings will be taxed as ordinary income at the highest federal & combined state tax rate!  No 0%, 15%, 20% federal maximal capital gains taxes or qualified dividends taxes here.  You will pay the IRS at least 24% for gambling winnings of $5,000 or more plus your state income tax applicable where you reside.  (I.E.)  federal tax gambling win rate of $5,000 or more is 24% + Illinois tax gambling winning rate 4.95% = 28.95% total federal & state of Illinois tax liability.

The IRS tax withholding rate under Section 3402(q) applicable to winnings of $5,000 or more from sweepstakes, wagering pools, certain parimutuel pools, jai alai, lotteries, and sports wagering is 24%. 

               First, to have gambling income you must deduct all your gambling losses from your gambling winnings & have won more money than you lost (uncommon).  Second, most people keep track of their gambling winnings, but not their gambling losses which greatly reduces their gambling income earnings.  Third, gambling losses can’t be deducted against your “ordinary earned income” like investment losses.  It can just be deducted by your gambling winnings.  Most successful gamblers or better yet, professional gamblers contemporaneously log their gambling winnings & losses much like an accountant usually on spreadsheet technology like Microsoft Excel, like an investor, business owner, or business manager would.  This review or your income & loss history will give you a blueprint to help you construct your future financial success or avoid future financial pitfalls.       

               In conclusion, it is the gambler, who has a lower probability of success at a higher tax rate then an investor, & it is not uncommon for gamblers to be charged taxes on their winnings; even though, they actually lost money throughout the tax year when they tally up all their losses due to poor record & bookkeeping & not being able to prove their position with the proper receipts & record keeping.  After all, it is the taxpayers’ burden to substantiate their deductions, lowering his or her tax liability, not the government.

Explore all our benefits at www.SolidTaxServices.com Thank you.

In Trust,

                 Ashley Thomas, EA