How To Report Gambling Winnings And Losses

Hit a big one when you were gambling and now you’re not sure about reporting gambling winnings? With increasingly gambling establishments, you should bear in mind that reporting gambling winnings is required by the Internal Revenue Service. All gamble winnings should be reported as income on your tax return.

Gambling income consists of, but is not limited to winnings from lotteries, raffles, horse and dog races and casinos.  Unfortunately, income from gambling also includes the fair market value of prizes like cars, houses, trips or other non-cash prizes. 

In general, if you win or receive an amount of money having the value of $600 ($1,200 from bingo and slot machines and $1,500 from keno) or higher in gambling winnings and your winnings are a minimum of 300 times the amount of the wager, the payer is required to issue you a form W-2G.  If you have won more than $5,000, the payer might be required to withhold 25 percent of the proceeds for Federal income tax.  However, if you did not give your Social Security number to the payer, the amount to be withheld will be 28 percent. 

The full amount of your gambling winnings for the year should be reported on line 21, Form 1040 of your income tax.  If you itemize deductions, you could deduct your gambling losses for the year on line 27, Schedule A (Form 1040).  You will not be able to deduct gambling losses if they are a higher amount than your winnings. 

It is essential that you keep an accurate diary or similar record of your gambling winnings and losses.  In order for you to deduct your losses, you should be able to provide receipts, tickets, statements or any other records that show the amount of both your winnings and losses. 

Face it, the IRS gets you coming and going.  Well, I'm off to play poker.