How do you guys handle taxes on crypto gambling wins? IRS making me nervous

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JellyBeanZoom

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Been gambling with crypto for about a year and had some decent wins recently (about 2.3 ETH in total). Starting to get concerned about the tax implications since I've never reported gambling income before.

From what I understand, crypto gambling winnings are technically taxable in the US (where I'm based), but it seems incredibly complicated with multiple transactions, different coin values, etc. Plus most of these crypto casinos don't provide any tax forms or statements.

How do you guys handle this? Do you report your crypto gambling winnings? Keep track of each transaction? Only report if you cash out to fiat? Or just fly under the radar and hope for the best?

Not looking for professional tax advice obviously, just curious what other players are doing in practice. Getting a bit paranoid as tax season approaches.
 
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Obligatory "I'm not a tax professional," but I do work in finance and have dealt with this personally.


In most jurisdictions (including the US), gambling winnings are technically taxable income regardless of whether they're in crypto or fiat. However, the practical reality is more complicated.

The technical requirements (US):
  • All gambling winnings are taxable income
  • You can deduct losses up to the amount of winnings
  • Need to report even if the casino doesn't issue forms
  • Each transaction (win or loss) should be documented
The practical challenges:
  • Most crypto casinos don't issue tax forms
  • Tracking hundreds/thousands of individual bets is practically impossible
  • Crypto value fluctuations add another layer of complexity
  • International jurisdictions create gray areas
Most players I know take one of these approaches:
  1. Net Reporting - Track deposits and withdrawals, report the net difference as gambling income/loss at year end
  2. Significant Wins Only - Only report major withdrawals (typically $10k+ equivalent)
  3. Full Reporting - Use specialized software to track everything (extremely tedious)
  4. No Reporting - The "hope I don't get audited" approach (not recommended)
Personally, I go with option 1. I keep records of all deposits to and withdrawals from crypto casinos, and report the net difference. This seems to be the most practical middle ground.

Some casinos like Coinpoker actually provides year-end statements which can be helpful.
 
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Tax attorney here with some experience in crypto cases. First, standard disclaimer that this isn't legal advice specific to your situation.

The IRS position on crypto gambling is still developing, but here's what we know:
  1. Crypto is property, not currency, according to current IRS guidance
  2. Gambling winnings are taxable regardless of form (cash, property, etc.)
  3. The burden of reporting falls on the taxpayer, not the casino
The safest approach is maintaining detailed records of:
  • Initial deposits (amount, date, USD value at time)
  • Withdrawals (amount, date, USD value at time)
  • Net gambling results
For practical purposes, most clients I work with track their net gambling profits/losses rather than individual bets. They keep screenshots of all withdrawals and deposits as evidence.

The risk level varies based on:
  • Amount won (larger amounts = higher risk)
  • KYC status (verified accounts create paper trails)
  • Conversion to fiat (bank deposits create flags)
Some crypto casinos like TG Casino operate without KYC, which creates an additional layer of complexity for reporting.

My general advice: report net winnings at minimum. The penalties for willful non-reporting can far exceed the tax amount if discovered.
 
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ZestyNoodle said:
Obligatory "I'm not a tax professional," but I do work in finance and have dealt with this personally.


In most jurisdictions (including the US), gambling winnings are technically taxable income regardless of whether they're in crypto or fiat. However, the practical reality is more complicated.

The technical requirements (US):
  • All gambling winnings are taxable income
  • You can deduct losses up to the amount of winnings
  • Need to report even if the casino doesn't issue forms
  • Each transaction (win or loss) should be documented
The practical challenges:
  • Most crypto casinos don't issue tax forms
  • Tracking hundreds/thousands of individual bets is practically impossible
  • Crypto value fluctuations add another layer of complexity
  • International jurisdictions create gray areas
Most players I know take one of these approaches:
  1. Net Reporting - Track deposits and withdrawals, report the net difference as gambling income/loss at year end
  2. Significant Wins Only - Only report major withdrawals (typically $10k+ equivalent)
  3. Full Reporting - Use specialized software to track everything (extremely tedious)
  4. No Reporting - The "hope I don't get audited" approach (not recommended)
Personally, I go with option 1. I keep records of all deposits to and withdrawals from crypto casinos, and report the net difference. This seems to be the most practical middle ground.

Some casinos like Coinpoker actually provides year-end statements which can be helpful.
Click to expand...
jk994 said:
Tax attorney here with some experience in crypto cases. First, standard disclaimer that this isn't legal advice specific to your situation.

The IRS position on crypto gambling is still developing, but here's what we know:
  1. Crypto is property, not currency, according to current IRS guidance
  2. Gambling winnings are taxable regardless of form (cash, property, etc.)
  3. The burden of reporting falls on the taxpayer, not the casino
The safest approach is maintaining detailed records of:
  • Initial deposits (amount, date, USD value at time)
  • Withdrawals (amount, date, USD value at time)
  • Net gambling results
For practical purposes, most clients I work with track their net gambling profits/losses rather than individual bets. They keep screenshots of all withdrawals and deposits as evidence.

The risk level varies based on:
  • Amount won (larger amounts = higher risk)
  • KYC status (verified accounts create paper trails)
  • Conversion to fiat (bank deposits create flags)
Some crypto casinos like TG Casino operate without KYC, which creates an additional layer of complexity for reporting.

My general advice: report net winnings at minimum. The penalties for willful non-reporting can far exceed the tax amount if discovered.G
Click to expand...
Thanks for the detailed responses! The session-based net reporting approach seems most practical.

Few follow-up questions:
  1. How do you handle winnings that you never convert to fiat? (just keep as crypto)
  2. Is there a minimum threshold where the IRS starts to care?
  3. Do crypto casinos report high-value withdrawals to authorities?
I'm leaning toward reporting net winnings to stay on the safe side, but the record-keeping seems daunting since I've played at 5-6 different casinos.
 
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One practical tip that's helped me stay compliant without going insane: the "quarterly snapshot" method.

Rather than tracking every transaction continuously, I take quarterly snapshots of:
  1. Total deposits across all platforms
  2. Total withdrawals across all platforms
  3. Current balance in all gambling accounts
  4. USD value of all three at time of snapshot

This gives me enough data to report accurately without the daily tracking burden. I use the first weekend of each quarter to gather this info and update my spreadsheet. For major wins (anything over $5K equivalent), I take additional screenshots and notes at the time they occur.

This approach has been sufficient for my tax reporting needs while keeping the administrative burden manageable. I've used it successfully for three tax years now.


TG Casino makes this easier with their comprehensive transaction history. The peace of mind from knowing I'm compliant is worth the few hours of record keeping each quarter.
 
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