Bay Area Estate And Tax Planning Law Firm

Hooray, you just won the lottery! Now pay the IRS.

On Behalf of | Sep 8, 2016 | Uncategorized |

If bells and buzzers started clanging seconds after you just pulled the lever on a slot machine, you’re likely a bit jazzed about reality at the moment

Although giddiness is understandable, so too is the need to take a breath, gather yourself and make sure that you walk out of whatever gambling establishment you’re in with your wallet stuffed or a check firmly in hand.

Oh, and on the way out, don’t forget to take your W-2G along with you.

Because that, lucky person, is what is going to ensure that the Internal Revenue Service gets its cut from your windfall.

We know many things about the IRS, with this being one of them: The agency is a jealous mistress when it sees money in your hand that it believes belongs to the federal government and not to you.

We referenced that in our immediately preceding blog post, with our August 31 entry noting what the IRS calls the “sharing economy.” As we pointed out in that post, the agency demands a portion of the earnings that any individual receives from participating in that rapidly emerging economic realm.

So, it is thus hardly surprising to note the comment from an IRS website page that “as a casual gambler, your gambling winnings are fully taxable and must be reported on your income tax return.”

There are of course some caveats attached to that. For example, it’s in nobody’s best interests for forms, paperwork and reporting requirements to attach to chunk-change winnings of a few bucks.

Beyond that “it’s just a couple of dollars” threshold, though, the IRS pays closest attention and, remember, it’s got a copy of that W-2G. If that document exists, it’s not a good idea to, well, roll the dice to determine whether you should ante up in response to reported winnings.

If you’ve run into some good luck from gambling, congratulations. If you’ve got questions or concerns relating to gambling winnings and any tax duties you might have regarding them, you might reasonably want to consult with an experienced tax attorney.