The Kentucky Derby is not just a spectacle of horse racing, it is an event where the who’s who of basically anything convene to see the first race in the coveted triple crown of horse racing. (For the uninitiated, the Preakness Stakes and the Belmont Stakes are the other two races).
If you were lucky (and fortunate) enough to pick the derby winner and take in big money, are you required to report your winnings? This post will explore the answer.
Indeed, there are certain situations where your gambling winnings may be deemed taxable income. Generally speaking, if your winnings are 300 times more than your original bet, you may have to complete a Form W-2G, an income form specifically for gambling winnings.
If you bet and win at a casino, the establishment is required to get your Social Security number before paying out your winnings. After all, the casino or sportsbook is responsible for reporting the payout to the federal government. Some casinos may take Uncle Sam’s 25 cut right out of your winnings before you leave.
And it is not just gambling winnings that can be taxed. Win on a game show, and you have to pay taxes on the fair market value of your prize; whether it is a car, trip, furniture or other non-cash prize. Further, the full amount of your gambling winnings must be disclosed. It is commonly line 21 of your return, depending on which form you use.
If you have additional questions about how to deal with taxes on gambling winnings, an experienced attorney can help.