Gambling winnings Chumba Casino online

[rose323]

I have a client who has been paid 50k (sweepstakes) description per customer. He did not receive a W2-G gambling form or 1099. I have been reading regards this casino It is overseas, and a lot of back and forth between the IRS and the casino. Where would I enter the gambling winnings if no form is issued? Winnings were sent a direct deposit to his bank account, and the loss was only 7,300.

I was thinking of other income?  

[rbynaker]

It may depend on the activity creating the income.  It's going to be Schedule 1 probably either line 8b Gambling or 8i Prizes and Awards.  When I hear "sweepstakes" I think Publishers Clearinghouse which doesn't involve a wager so it would be 8i.

Paul Harvey's not around anymore to tell us how you got from a $50K win to a $7,300 loss, so someone else will have to give us The Rest of the Story.

[rose323]

He first stated "It was like a sweepstakes prize" Then after a few questions he said it was from Chumba Casino then he stated he had 7300 in loss so the story thickened 🙂

[BobKamman]

I read it to mean he had a $50,000 prize and $7,300 in losing wagers, so net "profit" of $43,000.  But facts are like diamonds, you have to do some digging to find the best ones.  

[pamdory]

I'm inclined to vote for the Prizes and Awards also.  Which means his wagering losses won't be offsetting it.  I always hate explaining those things to clients.

[qbteachmt · Accepted solution]

"He did not receive a W2-G gambling form or 1099."

That's because it's a Game, not a casino. You're not betting real money.

"Since Chumba Casino operates with play-for-fun currencies and it’s considered to be a social gaming platform, we must say that the whole payment system is different compared to the one you can find at other PA online casinos. Gold Coins or Sweep cash aren’t considered to be real money."

"Don’t let the word Casino mislead you. As we've mentioned in our review, Chumba Casino isn’t an online casino in the traditional sense of the word. It’s conceived as a social gaming platform offering the possibility to play casino games, but it’s not casino since it doesn’t involve real money.

This online casino works with virtual currencies, Gold Coins, and Sweeps cash. You can only buy Gold Coins. On the other hand, you can only withdraw Sweeps cash. Therefore, playing Chumba Casino games isn’t considered to be a gambling activity."

https://www.vegasinsider.com/casinos/chumba/

That is not a loss, then. It's the cost of playing games.

https://www.strafe.com/esports-betting/reviews/chumba-casino/taxes/

"Since Sweeps Coins possess monetary value by redemption, they are classified as casino prizes."

"There are two primary ways to report Chumba taxes. The first is allowing the casino to pay withholding taxes on your behalf. You'll then get a Chumba Casino tax form or Form W-2G, which you can submit alongside your income tax returns.

Secondly, players can file the taxes personally with the IRS at the stipulated rate. In the case where you receive gift cards rather than cash prizes, you should report its fair market value as income. Gambling prizes should be recorded on your tax return as "other income." "

Which leads to me to think the $50k is casino money, not real money.

"Winnings were sent a direct deposit to his bank account"

Redemption by a US person would be the real money as a Prize.

"Legal for cash prizes to USA and Canada"

https://www.beatthefish.com/chumba-casino-review/

[RichExp]

Man, dealing with gambling winnings can be a real headache, especially when there's no official paperwork to go by. Your client scoring 50k from Chumba Casino sounds like a wild ride, but not getting a W2-G or 1099 adds a whole new layer of complexity.

[qbteachmt]

It's all about perspective. Don't overlook this part: "and the loss was only 7,300"

In other words, the taxpayer paid 7,300 for entertainment. That isn't a taxable event. The entire process needs to be evaluated, and then you correct your wording, to better understand this process.