Americans love to gamble. Humans love to gamble for that matter. Whether you bet on football, play poker or bet on the horses, your winnings are taxable and you must report them on your tax return. The rules apply even to casual gamblers. Gambling income includes winnings from lotteries, raffles, horse races and casinos. It also includes cash and the fair market value of prizes you receive, such as cars and trips.
You must report all your gambling winnings as income on your federal income tax return. This is true even if you do not receive forms typically issued such as a Form W-2G. If you receive a certain amount of gambling winnings or if you have any winnings that are subject to federal tax withholding, the payer is required to issue you a Form W-2G, Certain Gambling Winnings. The form reports the amount of your winnings to you and the IRS. The payer issues the form depending on the type of gambling, the amount of winnings, and other factors. You’ll also receive a Form W-2G if the payer withholds federal income tax from your winnings.
The payer must give you a W-2G if you receive:
- $1,200 or more in gambling winnings from bingo or slot machines;
- $1,500 or more in proceeds (the amount of winnings minus the amount of the wager) from keno;
- More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament;
- $600 or more in gambling winnings (except winnings from bingo, keno, slot machines, and poker tournaments) and the payout is at least 300 times the amount of the wager; or
- Any other gambling winnings subject to federal income tax withholding.
If you’re a casual gambler, you report all gambling winnings on the “Other income” line of Form 1040, U.S. Federal Income Tax Return.
You can claim your gambling losses up to the amount of your winnings on Schedule A, Itemized Deductions, under ‘Other Miscellaneous Deductions.’ The deduction is limited to the amount of your winnings. You cannot reduce your winnings by your losses and simply report the difference. You must report the full amount of your winnings as income and claim your allowable losses separately. Your records thus should also show your winnings and losses separately. You must keep accurate records of your gambling activity. If you are going to deduct gambling losses, you must have receipts, tickets, statements and documentation such as a diary or similar record of your losses and winnings.
If you have questions about reporting your gambling winnings on your tax return or any other related tax matters, contact the tax experts at Thorgood Law Firm www.thorgoodlaw.com For a FREE consultation call 212-490-0704.
