Do I need to file taxes on gambling winnings as a low income college student claimed as dependent?

Wait, so can they deduct their losses from the casino against their winnings? Like if they won $8,500 but lost $6,000 throughout the year, do they only pay tax on $2,500? And how would they prove this to the IRS?

Yes, you can deduct gambling losses up to the amount of your winnings, but only if you itemize deductions rather than taking the standard deduction. In your example, if you won $8,500 but lost $6,000, you could potentially only pay tax on $2,500. To prove this to the IRS, you need documentation of both your winnings and losses. This can include things like betting tickets, receipts, statements from casinos, player's club cards that track your gambling, a diary of your gambling activity with dates, locations, winnings/losses, and even bank records showing withdrawals for gambling purposes. Without proper documentation, the IRS may disallow your loss deductions if you're audited.

How exactly does taxr.ai help with gambling income? Does it actually tell you if you need to file or just help with the filing itself? I'm in a pretty similar situation but with sports betting winnings.

I'm skeptical about these kinds of services. Did it actually save you money compared to just going to a tax preparer? And how accurate was it with the gambling stuff specifically?

It actually determines whether you need to file based on your specific situation, including both your regular income and gambling winnings. It analyzes your total income, dependent status, and filing requirements together. For your sports betting situation, it would handle that the same way as casino gambling since the IRS treats different types of gambling similarly. As for saving money, I definitely saved compared to my local tax preparers who wanted $200+ for what they called a "complex return" with gambling income. The accuracy was solid - it correctly identified that I needed to file Form 1040 with additional documentation for my gambling activities, and explained exactly how my dependent status affected my standard deduction.

How does this actually work? I don't understand how a third-party service can get you through to the IRS faster than calling them directly. Sounds like they're just charging for something you could do yourself.

Yeah right, like the IRS ever answers their phones. I've been trying to get through for months about a letter I received. I'm calling BS on this service actually working. The IRS is completely broken right now.

It works by using technology that navigates the IRS phone tree for you and holds your place in line. When an agent is about to pick up, it calls you and connects you. It's basically a sophisticated call-back service that handles the waiting part for you so you don't have to stay on hold for hours. The value isn't in doing something you couldn't do yourself, it's in saving you from being stuck on hold for potentially hours. When I called directly, I never got through after multiple attempts and hours of waiting. With Claimyr, I was connected in about 15 minutes while I continued doing other things.

Thanks for mentioning this! I haven't received any W-2G forms yet, but I did have a couple of bigger wins that might have triggered reporting. Would the casino have given those to me right away when I won, or would they mail them later? Also, do you know what the income limits are for my parents to claim me as a dependent? I'm a full-time student.

Casinos typically mail W-2Gs by January 31st for the previous year's winnings, though for larger wins they often complete the paperwork at the time of payout. If you had wins over $1,200 on slots or $5,000 on poker/table games, you should expect to receive them. For your parents to claim you as a dependent while you're a full-time student under 24, there's no income limit, but you must not provide more than half of your own support. The support test looks at who pays for your housing, food, education, etc. - not just your income. So even with your gambling winnings, if your parents still provide more than half of your total support, they can claim you. But if those winnings meant you provided more than half of your own support this year, that could change your dependent status.

Is this really necessary for a college student with only $8,500 in winnings? Seems like overkill. The IRS isn't going after small fish like this when there are millionaires to audit.