Do taxpayers have to report Gambling Winnings if they haven't received a 1099-Misc?
We are witnessing a tremendous increase in the gambling industry both at the casino's as well as internet gambling. As a result more taxpayers will be reporting gambling winnings along with related gambling losses.
The IRS Code Sections specifically states that "all Gambling winnings are taxable income irrespective of whether the taxpayer does not receive a 1099-Misc"!
Fortunately, all the gambling winnings from recreational players are not subject Self-Employment taxes, despite being reported as Miscellaneous Income on the Form 1099-Misc.
Taxpayers fail to recognize that "complimentary goods and services such as free hotel accommodation at the casino's, free meals, free shows and gifts would be considered to be gambling winnings". But, as before, the Taxpayers can offset SUBSTANTIATED Gambling losses to the extent of gambling losses, without the 2% AGI limitation rule.
Taxpayers should consult their individual states to ascertain whether or not Gambling losses can be offset against Gambling losses, because there are some States that do not conform to the IRS rules in allowing a deduction for gambling losses.
As of today, it appears that the following states may not allow this deduction, these are Connecticut, Illinois, Ohio, West Virginia and Wisconsin.