The unsettled debate on the legality of playing at online casinos in the US is causing issues to arise for those wishing to fairly pay taxes, but also expecting fair treatment in return. Despite the Department of Justice's stance that all Internet gambling is illegal, no federal law prohibits gambling at online casinos.This leaves frequent players in confusion as to what is taxable and what is deductible. According to an article in the Wall Street Journal, the IRS does not have a special policy for online gambling, lumping it in with all other wagering.
This means all winnings must be declared, and losses can be deducted, as long as they can be substantiated. While producing records to show gaming losses for land-based casino clientele may be problematic, online casino customers have ready access to deposit records.
But the Journal says some states, such as California, are far less accommodating toward Internet gamblers. A spokesman for the California taxation department told Journal writers that taxpayers are responsible for proving a deduction comes from legal and legitimate sources.
This means that winnings are still taxed, but no credit given for losses, unless the state decides to accept the deduction. Unless state laws are explicit in denying online casinos legal status, as is true in six states, the federal confusion over online gambling legality will continue to permeate to many branches of government.
Published on November 22, 2009 by VirginiaMaddox
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