You work, you make money, and then you pay some of that hard earned cash in taxes so that your country’s economy can continue to be stable and work properly.
But what about the money you win from online gambling? Could they be used to pay your taxes, both fiat currency and Bitcoin? Does that cash get taxed?
Today we will talk about the laws and prohibitions on gambling matters and whether you have to pay. You will learn how the system works and whether you have to pay taxes on your Bitcoin winnings online or not.
Is Bitcoin Gambling Legal In The US
The first thing you need to know about the Bitcoin system is that there is not a single specific law in the world that prohibits gambling online using Bitcoin to play table games like Poker, Blackjack, and Baccarat. Whether your country has a law stating online gaming is considered illegal or not is a whole other thing.
The Department of Justice doesn’t target players who gamble online but the banking system instead. Meaning that if an online casino doesn’t have a license to operate within the US and a bank approves a transaction of money from or towards said site it could lose its license. When we talk about casinos that are certified and accept players from the US then the answer is no, it is entirely legal to gamble with Bitcoin in the US.
Now, playing and cheating are two different things. You will not go to jail if you get caught playing on a banned website, but you probably will be pressed with charges if you get caught cheating or match-fixing. If you happen to be part of a play where other players on the table are cheating, then you may be asked to testify, but you won’t have to go to court.
Always keep in mind that most states in the US have laws considering specific online gambling activities to be illegal and thus playing online, even using bitcoin as a currency, could lead to fines or rarely even imprisonment.
For all these reasons most bitcoin casinos are based on countries with few to none restrictions when it comes to online gambling. Such countries are Costa Rica, Panama, Malta and some other nations. So if the player residing in the US is caught gambling on sites like these and he or she uses Bitcoin as a currency, then there’s no danger of breaking law.
Is Bitcoin Taxable
To the eyes of the law, since Bitcoins aren’t “money” from the physical perspective of things, the government should find a way to make it taxable. So what did they do? They refer to bitcoins as “property”, and you know what happens when you sell or buy property. Your income levels change even if it is gain or loss that occurred.
So the answer is simply – yes. You do need to pay taxes when it comes to Bitcoin or any other form of cryptocurrency transactions. Now, how much you get taxed varies on how you manage those “transactions”. If someone found a way to hide Bitcoin trades, then taxes don’t have to be paid.
If a person was caught, however, they could face serious allegations which would lead to massive fines or even imprisonment.
Do You Have to Pay Taxes on Online Gambling Winnings
The short answer is yes. Even online gambling winnings remain a viable source of income. Thus they should be reported to your tax report. Just like any other form of income or outcome, referring to money, must be reported so does the money earned via an online platform, may that be from gambling or any other trading website such as Amazon, eBay, Etsy etc.
At the specific time, this article is written, the tax for online winnings in the US is at 25%. Keep in mind that taxes on online gambling incomes vary from country to country and many of them may even not have a tax for this kind of income at all. So long story short, if you live in the US, you do need to pay taxes on your online winnings.
Do You Have to Pay Taxes for Bitcoin Winnings From Online Gambling
As mentioned before, if you want to stay on the right side of the law, and not in risk it, you should report any Bitcoin-related trades and transactions. If you do so you will be taxed as by buying or selling “property” – like the property Bitcoin is baptised, your income levels change and thus do taxes as well.
Just like any other form of online winnings taxes may vary from each country and be sure you should ask an accountant to help you with them. So Bitcoins, just like any other kind of cryptocurrency related winnings from your online gambling adventures will indeed get taxed, always depending on your country’s regulations.
The main reason behind why it happens in the US is probably to counterpart the many holes in the laws applied by the Department of Justice about gambling – may that be online or generally speaking any other betting money. That way the player, even if registered legally on an online casino based outside the US, would still have to report the winnings to remain on the right side of the law. Being legal that is. So to be clear, if you live in the US, you do indeed need to pay taxes on your bitcoin winnings online.
When it comes to other countries you should be able to find out if there are any specific laws or regulations by doing a quick research on the Internet.
When referring to US citizens any money you earn from online gambling may that be from using real currency such as dollars or cryptocurrency, like Bitcoin, will be taxed if reported to the tax report.
To sum up, as long as you follow the rules of the legal system and you keep reporting the different sources from which your income reaches you, you will not be in any danger whatsoever.
Now, if you hate the fact that the government likes to “steal” a piece of your hard earned online winning, you would have not to report your online winnings. Remember, you do need to pay taxes on your Bitcoin winnings online. If you don’t do so, by not informing the tax authorities, then be ready to accept the possible consequences. Don’t say you haven’t been warned.
As always, good luck on your gambling adventures, and if you want your relationship with the Department of Justice to remain right then make sure not to hide any of your online winnings. May they be in Dollars or Bitcoin, and you will be all good to go and continue gambling on your favourite online Bitcoin poker site.