Do Online Poker Sites Report to IRS?
Yes, online poker sites report to IRS. This, however, also depends on whether the casino site is registered in the USA. Online poker sites registered in the USA and in compliance with gambling laws report to the IRS. These casinos can report video poker winnings above $1200, and poker tournament winnings above $5000 are also reported to the IRS.
However, sometimes online poker sites do not report your winnings to the IRS. In that case, what must you do? Read our guide below to learn how gambling tax works and how you can protect yourself.
Do Offshore Online Poker Sites Report to IRS?
Offshore casinos outside the US do not report players’ winnings to the IRS. However, even if that is the case, you still have to pay tax if you win playing on offshore casinos. According to the US Tax Code, all incomes are taxable, regardless of whether you earned that income in the US, online or outside the US.
Online Gambling Tax in States Where Online Gambling is Illegal
Even players in US states where online gambling is illegal are also obliged to pay taxes. Players don’t have to be concerned about whether paying taxes might land them in trouble because the role of the IRS is only to collect taxes.
Why You Should Pay Tax Even When Playing on Offshore Poker Sites
If you have won more than $1200 before and suspect the online site you have played on had not reported your winnings. You might not have to worry about the IRS finding out. However, it is best to be warned that if, for any reason, the IRS audits you and finds out that you have been evading tax, you might face penalties.
How to Report Gambling Winnings to the IRS
Since not all online poker sites report to IRS, it is your responsibility as a player to ensure that you file for your gambling winning tax. You must report this income on your tax return even if the casino does not send you a W2G form. Otherwise, you can arrange to get Form W2G to report the income.
How to Avoid Paying Tax on Your Casino Winnings
Paying taxes is an obligation that many are not happy with. However, if you feel you need to avoid paying taxes on your winnings, there is a legal way around it. This will only work if you have also lost money gambling.
To do that, you need to get a Win-Loss report from the casinos you lost money playing at. If your winnings are either equal to or slightly below or above your winnings, you can report that to the IRS with proof.
Conclusion
Only US-based online poker sites report to IRS. This is because online gambling sites operating outside the US do not have to comply with US laws. However, US citizens are bounded by US laws. Hence, it is important to either play on online poker sites that report to the IRS or always pay tax on all your taxable incomes.
