If you win large amounts of money, I'm sure those winnings are taxable. How about smaller amounts of money? Do casinos report all those $5, $15, and other smaller amounts of money to the IRS? Do gamblers need to do special bookkeeping for tax purposes?
I am actually not sure on this, I hope someone else knows the answer. I think you can make so much money, before it becomes taxable.
Checkers - The following is taken from the IRS website:
Topic 419 - Gambling Income and Losses
The following rules apply to casual gamblers. Gambling winnings are fully taxable and must be reported on your tax return. You must file Form 1040 (PDF) and include all of your winnings. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and also the fair market value of prizes such as cars and trips. For additional information, refer to Publication 525, Taxable and Nontaxable Income.
A payer is required to issue you a Form W-2G (PDF) if you receive certain gambling winnings or if you have any gambling winnings subject to Federal income tax withholding. All gambling winnings must be reported on your Form 1040, including winnings that are not subject to withholding. In addition, you may be required to pay an estimated tax on your gambling winnings. For information on withholding on gambling winnings, refer to Publication 505, Tax Withholding and Estimated Tax.
You may deduct gambling losses only if you itemize deductions. However, the amount of losses you deduct may not be more than the amount of gambling income reported on your return. Claim your gambling losses on Form 1040, Schedule A, as a miscellaneous itemized deduction that is not subject to the 2% limit.
It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.
Hope this helps!
I have never actually won enough at a certain time to end up needing to do it but I know a few people who have been luckier than I have. Now if I could add up all wins for the past decade or so then yea, maybe.
Texasholdem - Thanks for posting that information from the IRS website. I've been wondering about how the IRS feels about gambling income. It's too bad you can only deduct losses up to the amount of your gambling income! I guess if you net a loss at the end of the year though, you probably shouldn't keep gambling!