Can Online Casinos Report Your Winnings to the IRS?

Do Online Casinos Report Winnings to the IRS?

When a Casino Must Issue a Form W-2G

• $1,200 or more from slots or bingo (after bet deduction).
• $1,500 or more from keno (after bet deduction).
• $5,000 or more from poker tournaments (after buy-in deduction).
• $600 or more from any game if my win is at least 300 times my wager.

Do Offshore Casinos Notify the IRS?

Offshore casinos don’t report winnings to the IRS. Since they operate outside the US, they have no legal duty to send W-2Gs or withhold taxes. If I win at an offshore site, it’s up to me to report it.

However, using offshore casinos doesn’t mean I can avoid taxes. I must still report all gambling winnings to the IRS. Moving large amounts of cash between offshore casinos and US banks raises a red flag.

Report Casino Wins on Taxes

I report every dollar win whether it was at a legal US casino or an offshore site. Even if the casino didn’t withhold taxes or send me a W-2G, I must report my winnings.

Report Winnings on Form 1040, Schedule 1

When I file my taxes as other income, I report my gambling winnings on Form 1040, Schedule 1, Line 8b.

The IRS doesn’t care if I won from slots, poker, sports betting, or table games. If I received a W-2G I fill in the exact amount.

Risk Audits and Penalties

The IRS can match reported winnings from W-2G forms with my tax return. If I fail to report winnings that a casino already reported, they can audit me or issue a fine.

Can the IRS Track Online Casino Wins?

Players often think they don’t have to report gambling winnings, but that’s a mistake. The IRS has ways to track big wins, bank transfers, and even crypto transactions.

Casinos That Report Winnings Over Specific Thresholds

If I win over $1,200 from slots, $5,000 from poker tournaments, or $600 from sports betting (if 300x my wager), the casino sends me and the IRS a W-2G form.

I get a copy, but the IRS already knows about the win. If I don’t report it, they will notice. Casinos also track high-volume players.

Bank Transfers, Crypto Transactions, and Audit Triggers

Offshore casinos don’t report to the IRS, but my bank might. Transactions over $10,000 can trigger Currency Transaction Reports (CTR). More to the point, financial institutions will notify the government.

Even crypto isn’t invisible. The IRS now requires exchanges like Coinbase, Binance, and Kraken to report large transactions.

The IRS will pick it up when you convert big winnings from Bitcoin to cash. Don’t think you’re flying beneath the radar because you’re not.

What Happens If the IRS Catches Players Underreporting?

Can I Deduct Gambling Losses?

You can deduct gambling losses, but there’s a catch. The IRS allows deductions, but only if you report all your winnings. If I don’t keep proper records or fail to itemize, I could miss out on potential tax savings.

Using Schedule A to Offset Winnings with Documented Losses

I can only deduct gambling losses up to the amount of my reported winnings. If I win $10,000 but lose $12,000, I can only deduct $10,000—I can’t claim a loss beyond my winnings.

I must file Schedule A instead of taking the standard deduction. If my total itemized deductions aren’t higher than the standard deduction, it’s not a tax benefit.

Why Casual Gamblers Must Itemize to Claim Losses

Casual players don’t always itemize because the standard deduction is high. In other words, it’s $13,850 for single filers and $27,700 for married filers.

If my total deductions—including gambling losses—don’t exceed that amount, it’s better to use the standard deduction. This means most casual gamblers won’t benefit from claiming losses unless they win big.

Professional gamblers have different rules. They can deduct gambling expenses as business costs on Schedule C, but casual players can’t. If I’m not a full-time gambler, I must follow the IRS itemized deduction rules.

The Importance of Keeping Detailed Gambling Records

The IRS won’t take my word for my losses because if they audit me, I must prove the following:

• Win/loss statements from online casinos
• Bank statements showing deposits and withdrawals
• Betting logs with dates, amounts, and game types
• Receipts from land-based casinos

Without proper documentation, I can’t claim deductions. Claiming gambling losses can lower my tax bill, but only if I follow the rules.