After a big win on a lotto ticket or after a great night at the casino, the last thing you’re probably thinking about are those pesky tax obligations that come along with it. While that brand new sports car or fancy yacht may look enticing, it’s important to remember that the IRS wants their fair share.
What Counts as Gambling Income in the Eyes of the IRS?
Gambling income includes winnings from lotteries, raffles, horse races, sports betting, casinos, and cold hard cash, which is a standard assumption. But did you know that it also includes the fair market value of prizes like cars, trips, etc.? So, if you made a deal with Wayne Brady, got lucky betting the ponies, or took on losses betting on the Lions, you need to make sure you’ve got your house of cards in order come tax time.
Reporting Lottery Winnings to the IRS