What players need to know about online casino taxes
Online casinos are legal in many countries around the world, and they accept players from all over the globe. Some countries even offer tax breaks to encourage people to play their games. The United States does not offer such tax benefits, however. What should American players look out for when choosing an online casino? Let’s see in the article below some of the things that players need to know about online casino taxes.
online casino taxes
Taxes on US Players
US citizens who choose to play at a licensed online casino are required to pay federal income taxes just like anyone else. For example, if you earned $100,000 last year and played your favourite slots 10 hours per week (which is pretty much what I do), then you will be expected to pay $19,041 – or 19% – of that money as tax. If you don’t have any other deductions, this may mean paying more than $5,000. Of course, there are ways of eliminating these charges, but it does involve doing some research first. Some online casinos waive the IRS withholding requirement altogether, so check with them before committing yourself.
Taxes on Non-US Gamblers
Non-US residents can enjoy playing at most sites, but they must be aware that they will still owe tax on the winnings. This means that foreign winners will almost certainly face higher tax bills than domestic ones. Tax rates vary widely between nations; for example, New Zealanders enjoy a low rate of 15%, while those in France face a rate of 35%. Fortunately, the IRS allows taxpayers to use the Foreign Earned Income Exclusion.
Taxes on Wagers
Taxes also apply to the wagering aspect of gambling. Although online gambling transactions occur across international lines, the IRS requires that Americans keep records and file reports detailing how often they gamble and how much each session has cost them in terms of tax. They can only deduct what they spend on gaming activities, and this deduction will be limited to 30% of their adjusted gross income. Those who fail to report their losses could find themselves facing fines.
In conclusion, the rules surrounding US gamblers’ taxes are fairly simple, but they are also rather convoluted. There are times when a non-resident player wins a large sum of money, yet pays no taxes whatsoever.
