Are You Being Audited Because of Unreported Gambling Winnings?
Any amount of earnings won in legal (or illegal) gambling activities is subject to federal income tax reporting, including lottery winnings at the state level. All winnings above $5000 are reported directly to the federal IRS prior to paying out the amount won. Because winnings are reported as income to the federal government, nearly every state requires the winnings to be reported as income on state tax returns, as well.
Taxation of Non-Cash Prizes
Winning a prize in the form of non-cash property, such as a car, a house or a vacation trip is not exempt from federal taxation. Winners are required to report the fair market value of the prize. Game show contestants must pay the taxable amount due prior to claiming their non-cash prize. Under certain conditions, the organization sponsoring the lottery or other event at which prize money was awarded may issue a W-2G to report gambling winnings.
Some examples of gambling activities subject to federal and applicable state taxes include:
- Horse race tracking betting, dog betting, jai alai and other paramutual betting venues
- Casinos, including Atlantic City, Las Vegas, Reno and casinos on Native American property
- Poker tournaments, card room winnings
- Raffles, bingo
- Lost machines, keno and black jack events
Schedule a Consultation to Discuss Taxation of Gambling and Lottery Winnings
If you are involved in an IRS audit or investigation regarding unreported gambling or lottery income, talk to federal IRS tax law attorney Angelique M. Neal in Brighton, Michigan. As a former IRS tax lawyer and Special Assistant United States Attorney, Ms. Neal understands the tactics and measures the IRS takes to recover taxable income from gambling winnings. She will work aggressively to help you protect your rights and keep as much of your winnings as the law allows.
From offices in Brighton, Michigan, tax lawyer Angelique M. Neal represents clients throughout the state, the Midwest and the United States. Wherever you are, call toll free 888-351-8395 or contact the firm by e-mail to arrange a consultation with an experienced IRS tax attorney.
