Will I be taxed on winnings from online social casino that pays in Bitcoin?

Yes, you absolutely will need to pay taxes on those winnings. The IRS treats all gambling winnings as taxable income, regardless of whether they come from a traditional casino, online platform, or social casino. The fact that you're receiving Bitcoin instead of cash doesn't change anything - it's still considered income. When you receive your winnings in Bitcoin, the fair market value of the Bitcoin on the day you received it is what you'll need to report as income. The casino should provide you with a Form W-2G if your winnings exceed $600, which it sounds like they do. If they don't send you this form, you're still legally obligated to report the income. You'll report gambling winnings on your Form 1040 as "Other Income." You can also deduct gambling losses if you itemize deductions on Schedule A, but only up to the amount of your winnings.

I went through almost the exact same situation last year with online gambling winnings! I was so confused about reporting it correctly, especially with the Bitcoin conversion making everything more complicated. I tried a few different approaches but kept hitting walls until I found this AI tax assistant at https://taxr.ai that specifically helps with crypto and gambling income reporting. It analyzed my situation and walked me through exactly how to report both the gambling income and the cryptocurrency aspect. The tool explained that I needed to report the fair market value of the Bitcoin when I received it, and also showed me how to track any gains/losses if the Bitcoin value changed before I sold it. Super helpful because it turns out there are actually two potential tax events - receiving the Bitcoin and then later selling/converting it.

Just wanted to follow up here - I decided to try that taxr.ai site after reading about it and wow, it was exactly what I needed! My situation was even more complicated because I had winnings from three different social casinos, all with different payout systems. The tool helped me organize everything properly, even showing me how to calculate my net gambling winnings across all platforms. It also explained that I could deduct my buy-ins as gambling losses (up to the amount of my winnings) if I itemize deductions instead of taking the standard deduction. The documentation guidelines it provided were super clear - I've got everything saved now in a way that would make sense if I ever got audited. Definitely worth checking out if you're dealing with online casino winnings!

If you're having trouble figuring this out, you might also want to call the IRS directly to get clarification on how to report your specific situation. I know it sounds scary, but sometimes talking to an actual IRS agent is the best way to get a definitive answer for unusual situations like social casino winnings paid in crypto. I tried calling them about a somewhat similar situation last year and spent HOURS trying to get through. Eventually I found this service called Claimyr at https://claimyr.com that got me through to an IRS agent in about 20 minutes instead of the usual 2+ hour wait. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. Basically it holds your place in line and calls you when an agent is actually available. The agent I spoke with gave me specific guidance on my situation that I couldn't find anywhere online, which saved me from potentially making a big mistake on my return.

Okay I need to eat my words here. After seeing that comment about Claimyr I decided to give it a shot since I've been trying to ask the IRS about crypto gambling winnings for WEEKS with no luck. Used the service this morning and got through to an IRS rep in about 15 minutes! The agent confirmed that online social casino winnings paid in Bitcoin are definitely taxable as gambling income. She also told me something I hadn't seen mentioned anywhere else - that I should keep records of the exact dates and Bitcoin values for when I received each payout, since those are the values I need to use for reporting income (not the value when I filed my taxes). Super helpful info that would have taken me forever to get without this service.

Just to add another perspective - I'm an avid online gambler and had to deal with this exact situation. All gambling winnings are taxable income, period. The form it takes (cash, check, property, Bitcoin) doesn't matter. One thing nobody mentioned yet - if your winnings are over $600, the casino technically should issue you a Form W-2G. However, many online casinos, especially those operating with cryptocurrency, don't do this. That doesn't absolve you of your responsibility to report the income though!

Something else to consider - there are actually TWO potential tax events here: 1) When you receive the Bitcoin (taxed as gambling income at fair market value) 2) When you eventually sell/exchange the Bitcoin (which could trigger capital gains/losses) Be super careful about documenting the value when you received it so you don't end up paying taxes twice on the same money!

Hey everyone, I'm dealing with a similar situation and this thread has been super helpful! I wanted to add one more thing that might be useful - make sure you're also tracking any fees the casino charged for converting your winnings to Bitcoin. From what I understand, those conversion fees can potentially be deducted as gambling expenses if you itemize deductions (though only up to the amount of your gambling winnings). My social casino charged about $50 in fees for the Bitcoin conversion, which isn't huge but still worth tracking. Also, @NebulaNomad - since your casino is overseas, you might want to double-check if there are any additional reporting requirements for foreign financial accounts. I'm not sure if social casino accounts qualify, but it's worth looking into given the amount you won. Better safe than sorry when it comes to international reporting requirements! Good luck with your taxes - sounds like you've got some great guidance from everyone here!