Beware of Casinos Gambling With Your Taxes

A while ago, my mother received a letter from the IRS stating she owed tax (plus penalties and interest) on her jackpot winnings at a Delaware casino in a prior year. They included a copy of the W2G form that she (according to them) had neglected to claim on her Federal tax return. Mom had not been to that Delaware casino in that year because there are now more than enough casinos in our state where you can play and lose your money.

My mother did not know where to begin to get this resolved, so she called for my help. As an accountant, my first thought was to see a copy of the receipt the winner had signed when she collected her jackpot. Mom called and asked the accounting department to fax a copy of the receipt to me.

It clearly was not my mother’s signature on the receipt. After a second call to the casino, we learned several things about how the accounting is handled at casinos.

Turns out there is another person with the same name as my mother, but a different address and Social Security number. This person and my mother had both signed up for the casino’s ‘club’ card, and I suppose they each had to supply their Social Security number. This is the card you put into the slot machine you’re playing that is supposed to track your winnings and provide points for free meals, etc.

However, it looks like the casino had not bothered to verify the correct SSN when they filled out the paperwork for the winner, and therefore filed an incorrect W2G to the Internal Revenue Service for that jackpot. Meanwhile, my mother was being billed for the tax on the winnings, plus penalties and interest, while the real winner was not, and the clock kept ticking on the interest until this was resolved.

Another call to the casino was a little frustrating, as the accounting department had no idea how to solve the problem. (As an accountant, I knew they would have to send in a corrected W2G under my mother’s SSN stating no income, along with a new W2G stating the earnings for the winner under the correct SSN.) We called the IRS and they confirmed the need for the casino to file these two forms, and then we had to call the casino to explain how they needed to do their job to correct this.

Weeks later, Mom received a corrected W2G from the casino and I wrote a letter to IRS explaining the situation and asked for the penalties and interest be reversed. Eventually the case with the IRS was resolved, but not without a lot of frustration and time. The casino did not seem too fazed with the error – they did apologize, but we will never go there again. I had Mom call them to cancel her ‘club’ card so this wouldn’t happen again-to her, at least.

The lesson learned here is… if you do enjoy playing the slots or table games at a casino, do be sure to keep track of your winnings. If it’s available to you, ask the casino for a list of your year-to-date winnings at the end of December to make sure it agrees with your actual figures, and question anything that looks wrong. I am sure there are jackpot winners who wind up paying tax on money they didn’t win.

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Recover Your Casino Gambling Winnings

As per the US-Canada Tax Treaty, Canadians and International patrons* can offset their gambling losses against their winnings. Jackpot winners who have had their gambling winnings taxed can benefit from this treaty.

A win in the US casinos can be exhilarating but soon that excitement will fade when you realize that a 30% withholding tax that has been deducted from your gambling winning. However, there are several casino games and lotteries on which you can obtain a gambling tax refunds.

As outlined by the IRS, these are:

• Bingo
• Keno
• Slot machines
• Blackjack
• Poker
• State Lotteries

To obtain a casino tax rebate you need to keep in mind that the refund process normally takes 12-16 weeks. An ITIN application will be filled out and submitted on your behalf to the IRS. This ITIN number will become your permanent number which you can use as often as you need to file for a gambling refund. Finally a 1040NR will be filed on your behalf.

A 1040NR is a tax return, non-us resident must file to obtain a casino tax refund. Keep in mind these simple rules.

• If you are a winner for the taxable game that has been considered as an eligible gaming activity in the last three years.
• If you are a holder of the IRS Form 1042-S and the casino has offered that.
• If you are offset winnings with losses within the same tax year.

*Apart from Canadians, In addition to Canada the following other listed countries qualify: Austria, Czech Republic, Denmark, Finland, France, Germany, Hungary, Ireland, Italy, Japan, Latvia, Lithuania, Luxembourg, Netherlands, Russian Federation, Slovak Republic, Slovenia, South Africa, Spain, Sweden, Tunisia, Turkey, Ukraine, and the United Kingdom. These listed countries do not have to establish gambling losses in order to claim a full refund

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Casino Winning Taxes – See How Can You Turn it on Your Side

Going to casinos are fun and when you win in your game then it is an exhilarating moment of your life. You might feel a little low when you come to know that IRS charges thirty percent of your winning income as casino winning taxes. You can win back this situation on your side by taking these casino-winning taxes back to you in form of refund.

These tax refunds are not applicable to all those who are US residents but these are applicable to non-US residents because of an agreement signed between Canada and US regarding to casino winning taxes. This treaty brings in light how casino-winning taxes are to be treated by the citizens of Canada. It says that whatever income these Canadian citizens win from their gambling they should withheld thirty percent of it to the US tax.

Casino winning taxes depends on the total amount that you won in the game. The major factors that determine the taxes of casino winning are amount won, type of casino game, and ratio of amount of winning to the amount of bet. This says that even if you win in a gambling game, it is not necessary that you have to share thirty percent to withhold for tax, but it depends on ratio between your total winnings to that of losses. In some cases where total bets exceed your total winnings then in these cases you do not need to pay for any tax. It is your duty, still, that you should inform IRS about your total income and winning. This body is responsible for letting you know how much portion is to be charged as tax.

It is your duty to report to IRS about your winnings and losses but it totally depends on IRS to help you with how much amount is taxable. You must be a diligent taxpayer and must consistently report IRS body about even your smallest win. You can further reduce the taxes of casino winning by reporting gambling losses in itemized deduction of form 1040. It might happen that amount of losses would be as much as amount of winnings, so in these cases you do not need to pay any casino winning tax. You might sometimes, get confused by reporting winning and losses to the IRS body. You should continue doing everything in right method. You must report it to government body and avoid any kind of trouble by reflecting any bad or wrong casino winning taxes.

Many websites will help you come over this situation, if you have done any kind of mistake with your casino winning taxes and the IRS body. Try to seek their help and come over any such kind of mishandling of situations. These websites will help you with their assistance and full service to give you full clarification and save you from any trouble and litigation in near future. Be supporting towards government and make your casino winning taxes be in your favourable by legal methods itself.

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Super Casino Gambling – Online and Offline

Land-based casinos and online casino revenues and site releases are growing faster then ever. Even after the dust has settled following the recent American law prohibiting deposits to online gambling companies, large organisations such as Party Gaming, Ladbrokes and VIP Casino club are all increasing their efforts to attract a wider European or global audience.

Gambling itself is a compulsive and addictive activity, with numerous regulatory societies attempting to outlaw and even ban online gambling around the globe. Regulatory environments themselves differ from country to country. While the US has sought keenly to identify ways of banning online gambling, the UK has lead the way to ensuring that online gambling remains a choice for many, but does not become a threat to others.

Its recent release of a new Gambling Act has sought to protect children and problem areas from abusive gambling, while attempting to levy a tax duty on all income from gambling both offline and online. The Act will make it illegal to entice children to gamble and there will be compulsory age checks for online gambling websites.

Its new Gambling Act will provision for the construction of Super Casinos in selected areas across the country, though this has been scaled down from an initial 40 super casinos to around 8, following complaints from the public and opposition parties. The Gambling Act will allow casinos to operate 24 hours, with unlimited jackpots, and gambling will be allowed on Sundays and Bank Holidays. As far as online websites are concerned, when the Act comes into force at the end of September 2007, companies will be able to apply for a license to operate online gambling website from a UK base.

Countries differ in terms of how they levy a tax on gambling. For example, some will tax each bet individually while countries like the UK, tax only the gross profits that gambling organisations make. Territories like Malta and Gibraltar offer competitive tax regimes as well as the benefits of an off-shore financial centre.

Australia has a large gambling population, where statistic show that 80% of its population gambles. Super casinos are also allowed in Australia, with Sydney’s Star City reputedly the size of 7 football fields. A recent study also showed that Australians spend more money each week on gambling than they do on alcohol or clothes. State government proceeds from gambling have increased to around $3.8bn per annum, since 1998.

What of other jurisdictions across the globe?

Below is a list of some countries and some interesting figures relating to gambling.

Australia

80% of population gamble

Legal age to gamble is 18

$80 billion gambling turnover in 2006

States received $3.8 billion in gambling duties 2006

Online gambling is permitted

Sweden

95% of population gamble

Legal age to gamble is 18

58 billion Swedish Crowns turnover in 2006

Government received 5 billion Crowns in tax in 2006

Online gambling is permitted

Spain

70% of population gamble

Legal age is 18

EUR30 billion gambling turnover

Receives EUR1 billion in gambling taxes

Recently allowed online gambling licenses

Macau

60% of population gamble

Legal age is 18

$6 billion in gambling takings 2006

$1 billion state revenues from gambling

Online gambling is permitted

UK

70% of population gamble

Legal age to gamble is 18 (though lotteries and pools and low stake machine permit 16)

£53 billion gambling expenditure in 2006

UK received £1.3 billion in gambling duties in 2006

Online gambling permitted

US

80% of population gamble

Legal age 18 (most casinos age 21 as this is legal alcohol age associated with casinos)

$82 billion gambling expenditure 2006

States received over $8 billion in gambling revenues 2006

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Online Gambling Provides Higher Rates of Return

Your best bet for casino gambling is playing online. Online Casinos offer better than Vegas odds, deposit matches, convenience and a wider variety of games. There is a high level of competition between these casinos because of the ease of moving between them. They are competing not only with each other, but with land based casinos. Online casinos do not have the large overhead of land based casinos and this savings is passed on to the player.

Online casinos do not have the expenses of traditional casinos. Lavish Vegas casinos with neon lights, multimillion dollar lobbies and dancing fountains are nice, but someone has to pay for them. Cyber casinos look like small office buildings with 10 or 12 employees. Their largest expenses are licensing the casino software and monitoring for fraudulent activities.

Traditional casinos will raise table minimums and offer fewer high paying slot machines during peak hours. There is limited competition and they have a captive audience. If the number of players looking for lower limit tables and higher paying slot machines became great enough a new casino would eventually fill this need. This is the law of supply and demand. In cyberspace this luxury does not exist. The ease of opening a new online casino to fill a void makes this practice impossible.

In 2002, the United States Court of Appeals decided that the Federal Wire Act applies only to online sports betting and not to games of chance. This legalized online casino gambling for US players. However, it did not make it legal to open an online casino inside the United States. It is very difficult to collect taxes on winnings from online casinos, because they are based outside of the United States. They do not report winnings to the IRS and this has become a point of contention with both opponents and proponents of allowing US casinos to open online casinos.

In response to the inability to collect taxes the US Government has but many restrictions on the banking industry. These restrictions include coding online casino deposits and not allowing them from 13 states. The states that do not allow credit card deposits to online casinos are Michigan, Illinois, Louisiana, Oregon, Washington, Wisconsin, Indiana, Nevada, South Dakota, New Jersey and New York. Banks and players quickly discovered that anonymous prepaid debit cards were the way around this.

Online casinos offer deposit match bonuses. These bonuses are largest on initial deposits. Many online casinos will double your initial deposit up to around $1,000. Some will continue to double, or at least match a percentage of, your first few deposits. This is done in hopes that once the player has set up their account it will be easier just to continue playing at the same casino. Since there are only a few proven software packages, most online casinos are very similar. The ones that have set up their own software are generally not as secure. The match bonuses increase your odds and extend the amount of time you will spend playing with the same amount of money. Overall the higher payout percentages, match bonuses and convenience of not having to travel make online gambling and better bet than traveling to a casino.

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