The loss of federal definition of what constitutes illegal online gambling is causing tax puzzles for players at online casinos.

The unsettled debate at the legality of playing at online casinos within the US is causing issues to arise for those wishing to fairly pay taxes, but in addition expecting fair treatment in return. Despite the dep. of Justice's stance that every one Internet gambling is illegal, no federal law prohibits gambling at online casinos.

This leaves frequent players in confusion as to what's taxable and what's deductible. In step with an editorial within the Wall Street Journal, the IRS doesn't have a unique policy for online gambling, lumping it in with all other wagering.

This means all winnings have to be declared, and losses can also be deducted, so long as they are often substantiated. While producing records to turn gaming losses for land-based casino clientele could also be problematic, online casino customers have ready access to deposit records.

But the Journal says some states, akin to California, are far less accommodating toward Internet gamblers. A spokesman for the California taxation department told Journal writers that taxpayers are liable for proving a deduction comes from legal and legit sources.

This implies that winnings are still taxed, but no credit given for losses, unless the state decides to simply accept the deduction. Unless state laws are explicit in denying online casinos legal status, as is correct 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

Read More... [Source: California Gambling News]