recently opened casinos give residents an increasing number of in-state
gambling options, but whether gambling takes place at a state casino, a
racetrack or elsewhere, gamblers should be aware that tax consequences may
Q: Do I have to report my
gambling winnings on my federal tax return?
A: Yes. Gambling winnings are generally taxable and must be
reported your tax return. If you file IRS Form 1040, report your gambling
winnings on the “other income” line (line 21). Other income includes winnings
from lotteries, raffles, horse races and casinos. It also includes cash
winnings and the fair market value of prizes, such as cars and trips.
Q: Isn’t it true that I
only have to report my winnings if a gaming organization gives me an income tax
A: No. It is a common
misconception that you don’t need to report gambling winnings on your federal
tax return unless you receive a Form W-2G from the payer. In fact, you must
report your gambling winnings even if you did not receive documentation when you won the money or prize.
Q: If I have to report all
of my gambling winnings anyway, then why bother with Form W-2G?
A: The gaming organization or other payer of gambling winnings
must issue Form W-2G (“Certain Gambling Winnings”) to winners under certain
circumstances. For example, if the gambling winnings are subject to federal
income tax withholding, the payer should issue the winner a Form W-2G. Winners
should also receive forms when they have:
- $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.
Q: If I itemize
deductions, can I at least offset my gambling winnings with my losses?
A: Yes, but you can’t deduct gambling losses that exceed your
winnings. Also, you can’t simply reduce your gambling winnings by your gambling
losses and report the difference. You must report the full amount of your
winnings as income, and then claim allowable losses separately. To claim
gambling losses up to the amount of your total winnings, use Form 1040,
Schedule A, “Itemized Deductions,” under “Other Miscellaneous Deductions.”
If you plan
to deduct your gambling losses, you must have receipts, tickets, statements and
documentation such as a diary or similar record of your losses and winnings.
Your records should show winnings separately from losses. IRS Publication 529,
“Miscellaneous Deductions,” provides details about the type of information you
should keep in a gambling win/loss diary and the kinds of proof you should keep
in your records.
Q: Where can I get more
information about gambling income and losses?
A: For more information, see IRS Publication 529 or Publication
525, Taxable and Nontaxable Income. Both publications are available at IRS.gov,
or you can call 800-TAX-FORM (800-829-3676). You can also type “gambling” in
the IRS.gov search box to find articles about reporting and deducting gambling
The information for this “Law You Can
Use” column was provided by the Internal Revenue Service. It was prepared by the Ohio State Bar Association. Articles
appearing in this column are intended to provide broad, general information
about the law. Before applying this information to a specific legal problem,
readers are urged to seek advice from an attorney.
Labels: gambling, IRS, tax returns