A lot of people bet on their favorite game every year in the UK, whether it’s sports or casino games. You can choose to bet on the English football match between Chelsea and Liverpool or play your favorite casino games, which can either result in a win or loss. But the independence of what you bet on, you don’t have to forget about tax. So, before you go out to spend your hard-earned money you keep in mind that a certain percentage is to be paid as taxes on gambling winnings.
That’s not all because the below list comprises of 8 tax tips for gambling in the UK:
Report All of Your Winnings
It doesn’t matter the amount you win, it’s necessary to report and pay all taxes on gambling winnings. It can either be $5 or $5,000, it needs to be reported as a tax return. Even when you win a prize that’s not cash such as a car, the total value of the prize should be reported. Failure to abide by this will lead to you falling under the category of tax cheaters in the UK.
A form of W-2G is Required
Depending on your location in the UK, you might be required to file a W-2G form to report your gambling winnings. The form of W-2G has a different threshold based on the winning you secured from playing a certain casino game. In most cases, a winning amounting to 300 times the wager need s to be reported along with the taxpayer identification number.
Withholding of a Certain Percentage of Winning
A percentage of huge winning amounting to 300 times the original wager amount might be withheld by the IRS as income taxes. It can differ in percentage based on the location of the gambler in the UK, as well as the type of casino game you play.
Your Losses Might be Deducted
The gambling losses you acquire when playing casino games need to be recorded. Since the Tax reform in 2017, gives gamblers the ability to deduct their losses. However, your deducted losses can not be more than the winning you report on the W-2G form.
Always Report the Winning and Losses Separately
It doesn’t matter how much you win or lose, you have to report your winning and losses separately. For example, if you made a bet and won $500. You have to report the total winnings without deducting any amount. And the same applies to the losses. You don’t need to deduct your winnings from losses by yourself. You just have to report it separately and it will be evaluated by the IRS.
Ensure Good Records
According to the view of Joe Booth, as an expert in guest post topics, Keeping a good record for both your gambling winnings and losses is essential. You can either keep a diary, or a copy of the W-2G forms, wagering tickets, and others. These records allow you to keep a track of your gambling history in the future.
Whenever you receive a W-2G form along with the winnings. You don’t have to ignore claiming the winnings associated with the tax return. And you don’t have to forget that the IRS has their own copy of the W-2G form. So, they won’t find it interesting if you don’t claim your winnings associated tax returns.
State and Local Taxes
Depending on your location in the UK, you might have to pay both state and local taxes for all your gambling winnings. You have to report and pay all of your gambling winnings tax to both state and local authorities if applicable. It doesn’t matter whether you are playing low volatility slots or other types of casino games. Even the W-2G form has a section for gamblers to report both states and local taxes in the UK.
Reporting all of your gambling winnings and losses allows you to keep a unique track record. And that will not allow the taxes to accumulate into a wholesome amount.