A common misconception: A gambler wins $500,000 in a year, while losing $300,000. Intuitively, a gambler thinks he or she should pay income taxes only on the net earnings of $200,000. Wrong! All gambling winnings are considered to be taxable income. This means that this gambler could face tax liability for up to $500,000.
But this result can be avoided. The IRS allows gambling losses to be deducted, so long as a gambler itemizes the deductions. Also, the amount of losses on any tax return cannot exceed the amount of gambling income. The IRS allows gamblers to deduct their losses but state law does not, and this can create problems for many gamblers.
Gambling poses a number of unique tax issues. Statistically, gamblers are the target of a higher percentage of audits. The lawyers of McCauley Law Offices, P.C., understand how the tax laws affect gamblers with expenses, losses and taxable profits.
Greg McCauley can represent you at any point in a tax controversy. If you are the subject of an IRS tax audit, we will protect your constitutional due process rights. If the IRS or the state department of revenue is disputing the amount of tax you owe, our law firm can argue on your behalf. Our experienced negotiation regularly leads to a successful result for our clients. The firm’s objective is to solve your tax jam or IRS tax problem with a simple solution such as tax compliance.
Contact us today to learn more about taxes on gambling winnings. The earlier our law firm is involved in your case the more options you will have. Call now for a free consultation at 610-388-4474. All discussions about your circumstances with our attorneys are privileged and confidential.