Canada
What You Need to Know About Gambling and Your 2021 Taxes
The deadline for filing 2021 federal tax returns looms on April 18 this year and for gamblers, it’s an occasion to be reminded of how the tax code addresses their gaming activity. Generally speaking, that’s not too kindly.
The bottom line is simple and stern. As a rule, all income from gambling — including real money online casino play — must be reported eventually on Line 8 of the familiar Form 1040 (along with inclusion on Schedule 1).
To some, it may come as a surprise that gambling income is reported as a gross figure and not a net result. That stands in contrast to, say, capital gains or losses realized in stock transactions, which are reported on Line 7 of the Form 1040 (usually, along with a Schedule D).
In plain English and by example what that means is this: If a taxpayer wins $500 playing the slots in a casino on Monday and then loses $800 playing the slots on Tuesday, the taxpayer is required to report the $500 win on his Form 1040 on Line 8. The $800 loss would be accounted for on Schedule A (Itemized Deductions) — but there are caveats.
The first may be familiar to taxpayers who gamble. Reported gambling losses cannot exceed gambling wins so in the above example, the taxpayer would have an allowable deduction of just $500 for net zero result (the gamble eats the excess $300 loss). But then there’s another issue.
The taxpayer gets to account for gambling losses only if he/she itemizes deductions on Schedule A. And as a result of the 2017 tax revision, the allowance for the standard deduction was raised to a point where it doesn’t make financial sense for the vast majority of taxpayers to itemize their deductions.
What that means for many taxpayers who gamble relatively modestly is that they have no opportunity to deduct any gambling losses. So, the gaming “win” stands alone as income even if the aggregate gambling activity was a net loss.
As an aside, the standard deduction for married couples filing a joint return for tax year 2021 is $25,100. For single taxpayers and married individuals filing separately, the standard deduction is $12,550. For heads of households, the standard deduction is $18,800.
The impacts of gross gambling income on line 8 may be subtle but can be significant. For instance, that amount gets carried down to Line 11, adjusted gross income, which can affect a range of tax circumstances, such as how much of the taxpayer’s Social Security benefits are taxable.
FUNDAMENTAL TAX RULES FOR GAMBLERS
- Taxpayers who gamble should remember that all gambling winnings must be reported as income regardless of whether the operator issues documentation, such as a W-2G or a Form 1099.
- Unfortunately, gamblers cannot “net” their winnings and losses when reporting gambling income. Gambling income is usually reported on Schedule 1 and then carried over to Form 1040, Line 8.
- Gambling losses are accounted for on Schedule A, Itemized Deductions, and taxpayers must itemize to get the benefit of a gambling loss deduction. However, taxpayers have to choose between itemizing deductions or taking the standard deduction.
- If gambling losses are taken as a deduction, they cannot exceed the amount of gambling wins.
- Win or lose, taxpayers should keep a journal of their gambling activity. They should note where, when, what games were played, and how much was won or lost. Taxpayers should also keep any evidence of wagering activity, losses included.
- State taxes may also be due on gambling winnings and rules vary from state to state. Gamblers should familiarize themselves with their state’s tax policies on gambling income.
OTHER THINGS TO KEEP IN MIND
The proliferation of gambling, both bricks-and-mortar and on the internet, has created complications for taxpayers that should be addressed by a tax professional but there are some things taxpayers should keep in mind.
As mentioned earlier, keeping a journal of gambling activity be part of your record-keeping.
Remember, all gambling winnings are reportable even if a gambling operator doesn’t issue paperwork, often a W-2G or a 1099-MISC or a 1099-K.
And speaking of W-2Gs, here are the occasions when the Internal Revenue Service says a W-2G should be issued by the gambling operator:
- 1. The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine;
- 2. The winnings (reduced by the wager) are $1,500 or more from a Keno game;
- 3. The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament;
- 4. The winnings (except winnings from bingo, slot machines, keno, and poker tournaments) reduced, at the option of the payer, by the wager are:
- a. $600 or more, and
- b. at least 300 times the amount of the wager; or
- 5. The winnings are subject to federal income tax withholding (either regular gambling withholding or backup withholding).
What may irritate taxpayers who gamble is how gambling activity is treated as opposed to something like day-trading stocks. In the latter case, which also involves substantial risk-taking, the stock day-trader gets to net losses against gains without having to choose between itemizing deductions and taking the standard deduction.
UNFAIRNESS TO GAMBLERS
The unfairness to taxpayers who gamble, particularly those who play at modest levels, was noted by the American Gaming Association, the trade group that represents the gambling industry, when the 2017 tax code was being revised.
“Under such a higher standard deduction, small and mid-level slot machine players may not be able to itemize their deductions, even with their gaming losses, and hence may not be able to offset gaming wins reported as income with the full amount of their gaming losses,” the AGA said in a letter to Capitol Hill.
“AGA strongly recommends, as a matter of tax simplification, that gaming players should be permitted to subtract gaming losses from gaming winnings in order to compute their taxable net gaming income for purposes of reporting adjusted gross income, without being required to itemize their deductions.”
Unfortunately for gamblers, that recommendation was not taken by the Congress.
For years, the AGA has been trying to get the threshold for issuing W-2Gs raised from $1,200 to $5,000 without any luck. However, early in March, the Congressional Gaming Caucus advanced an effort to raise the slot tax threshold to $5,000 with bipartisan legislation and also provide a mechanism for future increases based on inflation. The current $1,200 slot tax threshold has not been adjusted for inflation since 1977 and, since then, the instances of $1,200 W-2Gs has skyrocketed.
DON’T FORGET STATE TAXES
In addition to concerning themselves with federal taxes, gamblers need to deal with state income tax obligations. Some states allow deductions for losses, some do not. Some states allow for losses and wins to be netted, most do not.
Michigan, for example, changed its tax laws recently to allow for gambling loss deductions where there are winnings. Mississippi, meanwhile, has its 3% tax where the gaming establishment withholds a 3% “nonrefundable” tax at the time a W-2G-level jackpot is hit regardless of whether the winner is a state resident.
Casino customers from outside the country get separate treatment. In many cases, the United States has tax treaties with other countries that dictate how non-U.S. gamblers are treated from a tax perspective. For instance, in the United Kingdom, gambling winnings are not taxed and the U.S. tax treaty with the UK means that U.S. taxes are not withheld from those gambling customers.
Bally Bet Sportsbook & Casino app
Bally’s Interactive Launches the New Bally Bet Sportsbook & Casino App in Ontario
Bally’s Interactive, the digital and sports betting division of Bally’s Corporation, has launched the all-new Bally Bet Sportsbook & Casino app in Ontario, Canada. This latest release marks another significant milestone for the company, following the recent app update in New Jersey and a series of successful app launches in the past year, including the introduction of Bally Bet Sportsbook across multiple states and Bally Casino in Rhode Island.
The updated Bally Bet Sportsbook & Casino app represents a major step forward, as it combines the functionalities of the existing Bally Casino app and Bally Bet Sportsbook app into one comprehensive platform. Powered by White Hat Gaming, this new app allows players residing in or traveling to Ontario to conveniently place wagers on both sports and casino games using a single app, account, and universal wallet.
“We are thrilled to introduce the new Bally Bet Sportsbook & Casino app, marking a significant milestone for Bally’s. This integrated platform merges the features of our previous apps, providing players in Ontario with a seamless experience for both sports and casino betting. Our commitment to enhancing the player experience remains at the forefront as we strive to personalize the enjoyment of playing Bally Bet,” said Robeson Reeves, CEO of Bally’s Corporation.
BCLC
Be #GiftSmart: Scratch the Idea of Gifting Scratch & Win Tickets to Kids
BCLC reminds adults to gift responsibly this holiday season
With the holiday season in full swing, BCLC is reminding British Columbians to gift responsibly and scratch lottery products from their shopping lists for kids.
“Scratch & Win tickets can make great stocking stuffers for the adults in your life, but they’re not for kids,” said Ryan McCarthy, BCLC’s Director of Player Health. “The research shows that children who have early encounters with gambling are four times more likely to develop riskier gambling behaviour as they grow up. While people are out shopping for those last-minute gifts, BCLC wants adults to be aware of the potential risks associated with gifting lottery products to children and to consider safer alternatives.”
While Scratch & Win tickets are among the most common ways kids can be introduced to gambling, children are increasingly exposed to various online forms, such as gambling streams.
“With the convergence of gaming and gambling, youth are becoming more exposed to gambling content in online spaces like streaming sites, where creators are able to live-stream their own gambling, usually while playing online slots and instant games,” said Dr. Luke Clark, Director for Gambling Research at UBC. “Our research at the UBC Centre for Gambling shows that a higher frequency of watching online gambling streams is associated with a more positive attitude towards gambling and a high intention to gamble in the future.”
In B.C., it is illegal to sell lottery products to anyone under the age of 19 and BCLC encourages adults to have conversations with the kids in their lives about the risks associated with gambling.
“Open and honest conversations are crucial when it comes to navigating childhood exposure to gambling,” said McCarthy, who shared the following tips to adults:
- Monitor for gambling-related lifestyle changes. For example, developing a positive attitude towards gambling or a preoccupation with video games or streaming sites.
- Be a positive role model. Exhibit safer gambling behaviour and talk about the risks.
- Limit exposure. Monitor kids’ online activities and discourage engagement with gambling content. Explain how gambling is based on chance.
AGCO
Jackpot Digital Receives Approval from AGCO as a Registered Gaming Supplier
Jackpot Digital Inc., a leading provider of innovative dealerless electronic poker gaming solutions, has announced that the Alcohol and Gaming Commission of Ontario (AGCO) has approved the Company to be licensed as a registered Gaming Related-Supplier (the “Supplier License”) under the Gaming Control Act in the Province of Ontario.
This significant achievement allows Jackpot Digital to enter one of the most dynamic and rapidly growing regulated gaming markets in North America. The Supplier License authorizes Jackpot Digital to supply its electronic table games to Ontario’s gaming venues, including casinos and other regulated gaming facilities.
Jackpot Digital’s flagship product, the Jackpot Blitz electronic table game system, offers a modern, dealerless, player-friendly solution that integrates traditional multiplayer poker games with cutting-edge digital technology. The Supplier License will enable the Company to offer its innovative gaming solutions to operators throughout Ontario, driving new revenue opportunities and enhancing player experiences.
“Receiving AGCO’s approval is a major milestone. This approval provides us with the opportunity to offer our top-tier electronic gaming systems to operators throughout all of Ontario, positioning us for further growth in one of the world’s most robust gaming markets. We are excited to bring our innovative products to Ontario’s gaming community and continue our commitment to providing exciting, technology-driven entertainment experiences,” said Jake Kalpakian, CEO of Jackpot Digital.
-
gaming2 years ago
ODIN by 4Players: Immersive, state-of-the-art in-game audio launches into the next generation of gaming
-
EEG iGaming Directory8 years ago
iSoftBet continues to grow with new release Forest Mania
-
News7 years ago
Softbroke collaborates with Asia Live Tech for the expansion of the service line in the igaming market
-
News6 years ago
Super Bowl LIII: NFL Fans Can Bet on the #1 Sportsbook Review Site Betting-Super-Bowl.com, Providing Free Unbiased and Trusted News, Picks and Predictions
-
iGaming Industry7 years ago
Rick Meitzler appointed to the Indian Gaming Magazine Advisory Board for 2018
-
News6 years ago
REVEALED: Top eSports players set to earn $3.2 million in 2019
-
iGaming Industry7 years ago
French Senator raises Loot Boxes to France’s Gambling Regulator
-
News7 years ago
Exclusive Interview with Miklos Handa (Founder of the email marketing solutions, “MailMike.net”), speaker at Vienna International Gaming Expo 2018