The IRS wants to know about your gambling wins and losses
If you enjoy the occasional weekend trip to Las Vegas, or even the occasional weekday trip to local tribal casinos, you may consider yourself well versed in gambling. But do you know what the IRS thinks about your gambling wins and losses? You may already know that any gambling winnings are subject to tax. The good news is that your gambling losses may become itemized deductions on your tax return.
Gambling income 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.
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.
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.
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.
The best bet is to keep records of gambling wins and losses. This means gambling receipts, statements, and tickets or by using a gambling log or diary.
See Publication 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.