The loss of federal definition of what constitutes illegal online gambling is causing tax puzzles for players at online casinos.

The unsettled debate at the legality of playing at online casinos within the US is causing issues to arise for those wishing to fairly pay taxes, but in addition expecting fair treatment in return. Despite the dep. of Justice's stance that each one Internet gambling is illegal, no federal law prohibits gambling at online casinos.

This leaves frequent players in confusion as to what's taxable and what's deductible. In keeping with a piece of writing within the Wall Street Journal, the IRS doesn't have a different policy for online gambling, lumping it in with all other wagering.

This means all winnings need to be declared, and losses can also be deducted, so long as they are often substantiated. While producing records to turn gaming losses for land-based casino clientele is also problematic, online casino customers have ready access to deposit records.

But the Journal says some states, akin to California, are far less accommodating toward Internet gamblers. A spokesman for the California taxation department told Journal writers that taxpayers are accountable for proving a deduction comes from legal and bonafide sources.

This implies that winnings are still taxed, but no credit given for losses, unless the state decides to just accept the deduction. Unless state laws are explicit in denying online casinos legal status, as is right in six states, the federal confusion over online gambling legality will continue to permeate to many branches of government.

Published on November 22, 2009 by VirginiaMaddox

Read More... [Source: California Gambling News]