We have researched online gambling taxes and summarized the facts. You will find out about taxes on gambling winnings, loss deductions, and more.
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Should you pay taxes on gambling winnings?
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What’s a professional player?
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The past and future of gambling taxes
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Deducting gambling losses
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Efficient funds management
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Conclusion
Should you pay taxes on gambling winnings?
As a Canadian citizen, you should know that winnings from wagering are considered the same as lottery winnings, therefore, not taxable.
The Government of Canada does not enforce online gambling taxes, as the profits are the result of chance, and hence not privy to any levy.
Online casino taxes for occasional players
The no-fee rule applies to all non-professional gamblers whose winnings originate from land-based casinos on the Canadian territory, as well as online gambling sites operating within its jurisdiction.
While the sole regulatory body based in Canada is the Kahnawake Gaming Commission, it doesn’t matter whether the casinos own a license from MGA, UKGC, or any other. The only obligations are to be a resident of Canada and to access the site from its territory.
Online gambling taxes owed by professional players
Although Canada is one of the few countries that do not impose online gambling taxes, there is a catch. Professional gamblers must pay online casino taxes on gambling winnings.
What’s a professional player?
If you gamble full-time to make a living, you are considered a professional. Those who play just for fun don’t do so daily and generally have another job as the primary profit source.
The title, howsoever, comes with responsibilities, one of which is connected to the online gambling taxes you must pay.
In this case, what you win is in fact taxable business income. You need to report your winnings and any related expenses on Schedule C as a self-employment income.
Nonetheless, The Canada Revenue Agency doesn’t exactly seem to hurry when it comes to assessing and auditing those players who earn their living through staking activities.
Additionally, losses, an essential part of wagering, play into the professional player taxes on gambling winnings.
What implications do losses have?
If losses are substantial, they take a toll on the overall income, and supposedly on the online casino taxes on gambling winnings. However, a court ruling in 2012 claimed that gambled losses are not write-offs.
Even as a non-professional, you must report what you win as “other income” on line 8 of the 2021 Schedule 1. You should declare any interest gained on winnings in the T5 form.
The past and future of gambling taxes
Initially, Canada didn’t impose an income tax as part of its efforts to bolster immigration. This situation went on until the First World War.
Financial matters didn’t change for potential online casino taxes on gambling winnings. They stay tax-free up to this day, and things have no reason to change any time soon.
Income taxes in 2019
Considering that the professional winnings are subject to online gambling taxes like any other income, we have prepared an instructive table.
Your profit will fall into one of the income tax segments, which are calculated according to your taxable revenue. Remember the following values will be adjusted for factors such as inflation in every tax year.
The federal income tax financial worths:
| Federal income tax brackets | Federal income tax rates |
|---|---|
$47,630 or less | 15% |
$47,630 to $95,259 | 20.5% |
$95,259 to $147,667 | 26% |
$147,667 to $210,371 | 29% |
More than $210,371 | 33% |
Deducting gambling losses
If your losses are not higher than the income, you’re eligible to withdraw some of them. You will have to keep some records so that you may report the winnings and accurately cash out the losses.
Necessary documents you must keep:
- Keno – You should own copies of the tickets that you bought and were approved by the venue, your cashing records, and the credit records
- Slots – You need a record of the machine’s number and the winnings sorted by date and time the slot was played
- Blackjack, Poker, Craps, Roulette, Baccarat, Wheel of Fortune – You ned the the table number and also venue credit card information that shows if the credit was issued at the booth or in the pit
- Bingo – You must have a record of the number of played games, the ticket costs, and additional documents such as receipts from the parlour or cashier
- Horses, harnesses, or dog races – You require a record of the wagers, races, and collected coupon winnings
- Lotteries – You must have a record of the purchased tickets, winnings, losses, and dates.
Efficient funds management
Even if you do not need to keep tabs for online gambling taxes, bankroll management will help your activity and playing responsibility.
We have conducted a sturdy and compiled the essential aspects of fund management and organization for playing in casinos.
Funds Administration Essentials
- Never borrow – Playing with borrowed money is an early sign of gaming addiction. It will have severe effects on your budget later.
- Think how losses affect your finances – You are supposed to enjoy playing in casinos, not go bankrupt from it. Try to avoid betting sums that would lead to significant losses.
- Don’t get greedy – The most important aspect when you gamble is knowing when to stop, even when winning.
- Make an expense plan – Grocery shopping without a list often leads to more funds than expected. The same logic applies to playing in casinos.
- Be true to yourself and to others – Lying about your winnings or losses will not help you with anything but make you unaware of the actual implications and negative outcomes.
- Have a break – Before making your next move or starting the next game session, take a moment to reassess the options.
- Leave it for the next day – Both for online or land-based casinos, you can always return tomorrow, instead of playing excessively today.
- Stay sober – You cannot make reasonable decisions when under the influence of substances.
- Stay on familiar ground – You’re the best at what you’re familiar with. Do not gamble big amounts on new games before practicing first.
Conclusion
If you don’t make a living by wagering, you don’t have to pay any land-based online casino taxes on gambling winnings.
In case you are a professional player, then the money you make is considered taxable income, and hence you need to pay online gambling taxes. Moreover, as a Canadian citizen, you should recall that you can take back the percent the American Government takes from the winnings gained in the States.
These are the essentials of online gambling taxes within Canada. The situation will most likely remain the same and amateurs will not need to pay taxes on gambling winnings.
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