Taxpayers must report all gambling winnings as income. They must be able to
itemize deductions to claim any gambling losses on their tax return.
Taxpayers who gamble may find these tax tips helpful:
- Gambling income. Income from gambling
includes winnings from the lottery, horseracing and casinos. It also
includes cash and non-cash prizes. Taxpayers must report the fair market value
of non-cash prizes like cars and trips to the IRS.
- Payer tax form. The payer may issue a Form
W-2G, Certain Gambling Winnings, to winning taxpayers based on the
type of gambling, the amount they win and other factors. The payer also
sends a copy of the form to the IRS. Taxpayers should also get a Form W-2G
if the payer withholds income tax from their winnings.
- How to report winnings. Taxpayers must report
all gambling winnings as income. They normally should report all gambling
winnings for the year on their tax return as “Other Income.” This is true
even if the taxpayer doesn’t get a Form W-2G.
- How to deduct losses. Taxpayers are able to
deduct gambling losses on Schedule
A, Itemized Deductions, but keep in mind, they can’t deduct gambling
losses that are more than their winnings.
- Keep gambling receipts. Keep records of
gambling wins and losses. This means gambling receipts, statements and
tickets or by using a gambling log or diary.
525, Taxable and Nontaxable Income, for rules on gambling and Publication
529, Miscellaneous Deductions, for more information on losses. Publication
529 also lists specific types of gambling records a taxpayer may want to keep.
Download and view IRS publications on IRS.gov/forms
at any time.
Avoid scams. The IRS does not initiate contact using social media or text
message. The first contact normally comes in the mail. Those wondering if they owe
money to the IRS can view
their tax account information on IRS.gov to find out.