This article is for the lucky ones who have managed to bring home a giant amount of cash from the casino.
The revenue regulating body, IRS always wants to know your total winnings if it is more than a certain set amount. In such a situation, you need know the right way to calculate your casino winnings.
Steps to Claim Casino Winnings
You need to calculate your total casino winnings of the year. If you do not have receipts from cash out, then you can use your bank account statement (if you have deposited the cash) to calculate the total.
For instance, if your total winning reaches $600, then you will need to assert the casino winnings on your income tax return.
If you have won a minimum of $1,200, then you need to fill up Form W-2G. Since casinos are bound to report to IRS when the wins of all their patrons are in excess of $1,200, it makes sense for you to do it too. The casinos send this form by 31 January of the succeeding year.
#3-Filling Form 1040
However, Form W-2G is applicable for only one time winning. This means, if your winning does not exceed $1,200 from each trip to casino or the total $1,200 is combined, you are not required to comply with the form and submit with income tax return.
In the above case, you must acquire IRS Form 1040. However, if you need to claim the winnings on the income tax returns then you are not eligible for this form.
Fill out the form 1040, but do not fill anything for now in Line 21, Line 22, Line 60, Line 71, Line 72 and Line 75.
Now, mention your total casino winning in Line 21 after filling rest of the form. Do not forget to write the winnings that you have earned in addition to the gambling winning. After that, calculate the sum of the amounts mentioned in Line 7 and Line 21 and fill it in Line 22.
In Line 60, you are required to define the federal income tax liability. Include the taxes that are owed on your winnings and entered in Line 21. You can calculate the tax liability by using the formula mentioned in Form 1040.
Now, you must determine the federal income tax already paid on the winnings. If the casino has given you Form W-2G, then federal income tax already withdrawn from your winnings are mentioned in Line 2.
Add this amount to any additional income that is listed on Form W-2 and/or Form 1099. Write the total in Line 71. Thus, it is now the total amount that you have already paid as federal income tax.
Deduct the amount mentioned in Line 60 from Line 71. If it comes to be a positive amount, it is the amount of your income tax return and the tax amount overpaid by you. On the other hand, a negative amount means you owe tax and are required to pay. Enter this amount in line 75.
Put your signatures at the end of Form 1040. File the income tax return and send a money order made payable to the US Treasury.
By following these steps, you will not face any issues in claiming your casino winnings.