Three Tips for Your Gambling Adventures
I love spending time with my in-laws during the holidays. They enjoy passing out lottery tickets during this time of the year. After the gift exchange, we rush to grab a quarter and a large wastebasket to catch the “ticket confetti” we create while scratching for hidden gems. I cannot forget the time when one of the kids scratched off a $60 prize and proceeded to throw the winning ticket in the wastebasket. Fortunately, her Uncle intervened and saved the winning ticket. It is extremely rare for one to win big dollars casino with scratch-off lottery tickets.
When everyone is done scratching off their tickets, we are instructed to pass them in. This sounds weird, but there is a logical explanation. We have to consider taxes!
It is imperative to point out that lottery and gambling winnings are taxable. Do you recall that $60 winning ticket? The winner turned it in for $60, but had to add it to their taxable income for the year. It sounds like a bummer, but it actually makes sense. Most income is taxable.
Were you aware that you may be able to deduct gambling losses against that income if you itemize? Yes, this is true! If you keep proof (acceptable by the IRS), you may be in position to use your worthless ticket purchases to lower the amount of taxes you owe from the winning ticket. In short, you would be using the tickets with no winning value to offset your winnings. Many shrewd gamblers use this tactic.
Please keep in mind that the odds are against you. You may be able to write off your lottery ticket purchases as an entertainment expense, but you should not go beyond your financial budget. An old gambler once said, “Don’t chase winnings with money you don’t have to spend.”
What do you see when you walk into a casino? I see your hard-earned money being used to furnish free drinks, discounted food, and high-priced suites. Some people find it difficult to accept that most of the games are tilted in the casino’s favor. You should try your luck at games that have better odds. For example, you should learn how to become an exceptional poker player. You will have a better chance of securing consistent winnings!
If lady luck blesses you with a huge win, the casino or state may be required to withhold income taxes when you get a payout. If you manage to win small amounts, you are responsible for reporting that income and paying the taxes. Hold on to your receipts and losing tickets so that you can potentially use them to offset your winnings throughout the year.
Gambling is exciting, but you must stay disciplined. Uncle Sam is watching you. He wants his share!