Monday, March 27, 2006

The Internal Revenue Code which is a kind of taxing agency monitored by government is very unkind to winners. The gambling winnings at the highest rates allowed are shrewdly taxed by the federal government. Sometimes the top tax bracket is about 50 percent in some high-tax states. Governments take 50 cents out of every additional dollar. You can always ditch the tax collector though but it is very difficult to do so. IRS knows that there are not many people who will voluntarily report their good luck in case they win an all-cash amount. As a result there are a number of agents deployed by IRS to monitor the casinos. Form W-2G is process of reporting big winners. Form 5754 reports the split in the winning amount. IRS receives nearly four million Forms W-2G and 5754 each year. This shows how much big business Gambling has become. Also this tells it that there are nearly four million big waiting to be taxed. The IRS and government do not always wait and make sure they get paid. And there are certain rules which allow winning player to lower the bite of the income tax. Read further...