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ushope777
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17 July 2014 - 3:30pm

U.S. Winners and Taxes (Question)

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I have been wondering about this one for a while.

Since online gambling is illegal in the U.S. what happens if a person from the U.S. wins a huge online jackpot? Like they always say, if the law doesn't catch up to you (in any situations) the IRS certainly will. How does that even work? I don't know

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auCL-Ed
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17 July 2014 - 11:38pm
#1

Ok first up: despite popular misconception and political propaganda and misinformation, online gambling is not illegal for most people in the USA, with the exception of a few specific states that have legislation. Its the transfer of money between banks and "unlawful internet gambling sites" that is illegal at a Federal level. No-one has ever been able to define what an "unlawful internet gambling site" is though. More info here: Is online gambling illegal in the USA?

Anyway... I believe that you guys have to pay tax on gambling winnings right? If so, you would have to declare it or risk getting in trouble if anyone found out. Would they confiscate your winnings if you declared them? I doubt it but I think if I were you I would rather talk to a US-based lawyer or tax accountant than relying on me! Wink

Also if you are in New Jersey or Delaware and playing at one of the licensed online casinos there I believe that you have to provide your SSN so everything is reported properly.

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usLuckyMe
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31 July 2014 - 4:22am
#2

I can remember seeing a line on income tax form for gambling winnings, but from what I understood, that amount was minus gambling losses.

auCL-Ed
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31 July 2014 - 4:51am
#3

Yes you are right - if you have to report winnings then you can deduct losses, so keep records if you are concerned about it.

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usVPRoyalFlush
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31 July 2014 - 8:37am
#4

remember you can only deduct losses up to your winnings, your winnings cannot be lower than 0, For example if you have a two hand pays of 2,500 and 4000, and on your win loss statement you have total win/loss of (12,000), your winnings are 0.

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usbarbadosslim93
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31 July 2014 - 11:51pm
#5

Okay, the legal way (as I believe) is for you to report your winnings at an online casino.

HOWEVER

Online gambling isn't regulated in the US (save for Nevada and New Jersey). Because of this, almost all operators are offshore. Who is going to enforce anything with reporting winnings? The US is never going to go to a spot like Antigua and get a firm there to spill the beans on player winnings.

Because of that, the reality is that you are kind of in an honor system. Sure, you are supposed to report that money, but there isn't any real way for the government to know what you are winning, right? The obvious solution for this problem would be for the government to regulate online betting, but that isn't coming anytime soon.

The bottom line is that it is your call, and I guess there is a chance that you can get caught if you don't report that money... but for the little bits most people get online it likely wouldn't ever be suspicious enough for the government to investigate.

Jackpots on the other hand... that may be a different story. I will let you know as soon as I win one.

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1 August 2014 - 3:21am
#6

They are easy to hit, I sit playing Spin Poker for 2-3 hours for 45 dimes or quarters.
As for reporting online winnings There is no way for them to know if you live in a state where it remains unregulated.
As for regulation of online betting it will not happen where there are Indian/Tribal Casinos.

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