Won a bet? Here’s some info about the pertinent tax laws in US
There is not much similarity between religion and taxation but if one parallel could be drawn between the two it is that many tax regulations and religious principles are set in stone. They have remained the same for ages and the people are expected to follow them by the letter.
Different countries have different laws but the core principles of taxation are true for all the countries. Income from various sources is deemed taxable under laws of various countries. For e.g. The Internal Revenue Service taxes (IRS) all income accrued from any source under the laws of the United States of America. This means that winning money from gambling, lottery, etc. is also taxable in America.
We have brought you some tax rules which can help you legally manage your gambling winnings.
Forms 1099 must not be ignored
You must be familiar with the various 1099 forms that you receive at the beginning if each year. Your social security number is attached to these forms and they include sort of a notice about what part of your income is taxable. If you are not certain if income received from a certain source is taxable or not you must also report that in the Forms 1099.
The Forms 1099-Miscellaneous cover almost all type of income. If you are employed in a corporation then your payer will roll out the forms on regular basis and send them to you. In a scenario where you don’t receive the forms it is wise not to ask for them as you might end up getting two set of forms, one which is issued in the ordinary course and another because you asked for it. This means that the income reported to the IRS will be twice your actual income.
Refrain from altering tax returns
As per the IRS rules you should file to amend the returns if you find a mistake in it afterwards. But be careful about taking this step as the amendment request go through strict scrutiny of the IRS. So when you file to amend you must correct every mistake, if the IRS finds that you have not sought to alter something from which you were benefiting you could land in trouble.
Don’t overdo documentation or try to explain too much
First thing to know here is that you must file for your returns within the stipulated time even if you are not able to pay within such time. Filing returns on time can save you from the unnecessary penalties. You can even arrange for an agreement with the IRS wherein you pay the tax in instalments.
Secondly, you must not attach too many documents and if you are required to explain or disclose something then try to keep it concise. And there is no need to attach documents that are not asked for in the forms for filing return. If the IRS needs any particular document from you they will ask for it.