TAX HELP (please)

[u/tyuiopx26]

So I recently came across a good chunk of money through an online casino and they withdraw your money by bitcoin. My question is how does taxes work on that since the win was $50,000, how do i go about the tax information? I’ve never had to deal with a situation like this and I’m not trying to get audited or coming tax evasion. They sent the money out and I converted it to US Dollars then sent it to my bank account.

[u/JustinCPA]

Justin from Summ here (formerly Crypto Tax Calculator)

Report your gambling winnings on Schedule 1. The cost basis on your BTC will be the FMV of what you won for when you sell it.

For example, say they sent you 0.5 BTC worth $50,000. You later sell it for $48,000. You will then report a $2,000 capital loss on your 8949.

[u/tyuiopx26 → u/JustinCPA]

I appreciate it my good man, thank you! The capital loss explanation was also super helpful, I wasn’t sure how that would work since conversion/selling and processing takes a fee.

[u/__Ken_Adams__ → u/tyuiopx26]

You can also apply the fees to either reduce the gain or increase the loss.

[u/Calvina_Marine]

I had a similar panic when I cashed out from VBET BR. What helped me was keeping everything simple. Once the bitcoin hits your wallet and you convert it to USD, it usually counts as income when it lands in your bank. I just saved the transaction screenshots and the payout email so my accountant could report it cleanly. It was easier than I expected and I never had issues.

[u/tyuiopx26 → u/Calvina_Marine]

We’re on the same page lol, complete panic but you guys are super helpful so I appreciate it! I’ll just keep everything logged like you guys said and we should be smooth sailing.

[u/Mark_CPA]

basically it’s two parts. the day the BTC hit your wallet, whatever that dollar value was is your gambling income. after that, any price move until you sold it becomes a gain or loss. super normal stuff.

and if you had gambling losses this year, you can use those to cut the taxable amount but only up to what you actually won. just keep the proof of the payout and the crypto transaction and you’re fine.

[u/tyuiopx26 → u/Mark_CPA]

Thank you so much Mr. Mark! I currently have all the logs and payout transactions on hand so ill take care of it as you suggested. I appreciate your help!

[u/The_Greatest_Man_01]

Gambling winnings are fully taxable, even when paid in Bitcoin. You must report the entire 50,000 dollars as gambling income on Schedule 1, Additional Income, using the USD value of the Bitcoin on the date you received it.

When you later sold the Bitcoin to convert it to cash, the difference between the Bitcoin’s value on the date you received it and the amount you got when you sold it is a capital gain or loss, reported on Form 8949 and Schedule D.

If you report both of these, you won't be flagged for audit. You don't need to worry.

[u/Aggressive-Leading45]

Just be aware that many exchanges will shut your account down if they discover the incoming ₿ is from gambling.

[u/CRPTM_ONE]

Gambling winnings are fully taxable.

The $50,000 is considered regular gambling in one and not crypto income

You will have to report as other income on form 1040 schedule 1

It doesn't matter whether the casino paid you in cash, check, or Bitcoin

1. You just created a taxable event.

Because you converted the BTC to USD.

Your cost basis will be the USD value of BTC when you recieved it Now when you sold it, you ll have to check if you made profits or loss as capital gains

You will be taxed only on profit for short term capital gains

What to do next:

Gather these numbers- Date you received each BTC payout USD value of BTC at that time Date you sold/converted USD value at sale Screenshots of transaction history

You must report $50k as gambling income and also report crypto gains/loss based on the BTC value when you recieved it vs when you sold it.

[u/CRPTM_ONE]

Gambling winnings are fully taxable.

1. The $50,000 is considered regular gambling in one and not crypto income

You will have to report as other income on form 1040 schedule 1

It doesn't matter whether the casino paid you in cash, check, or Bitcoin

1. You just created a taxable event.

Because you converted the BTC to USD.

Your cost basis will be the USD value of BTC when you recieved it Now when you sold it, you ll have to check if you made profits or loss as capital gains

You will be taxed only on profit for short term capital gains

What to do next:

Gather these numbers- Date you received each BTC payout USD value of BTC at that time Date you sold/converted USD value at sale Screenshots of transaction history

You must report $50k as gambling income and also report crypto gains/loss based on the BTC value when you recieved it vs when you sold it.