The answer is YES!!! No matter whether you go to the casino, the race track or play the slots when you win, the IRS will be holding out its hands for its cut. Gambling income also includes any prizes you win like cars, trips or jewelry, all of which should be reported on your tax return.
Where do I report my gambling winnings on my tax return?
- Your gambling income is reported on your federal tax return on the “Other Income” line. Most states tax gambling winnings as well. Check the instructions for your state income tax return for further information.
- You may receive an IRS Form W-2G which will tell you the amount that you need to report on your tax return, plus any money that has been withheld for taxes. The place where you won will give you the form based on the type of gambling, the amount of winnings, and other factors.
- You must report all your gambling winnings as income on your federal and state income tax returns. This is true even if you do not receive a Form W-2G.
Can I deduct my gambling losses on my tax return?
- Yes, you can deduct your gambling losses on your federal tax return on Schedule A, which is where you report itemized deductions.
- You can’t deduct losses that are greater than your gambling income.
- You must report your winnings as income and claim your allowable losses separately. You cannot subtract your losses from your winnings and report the difference.
- You must keep accurate records of your gambling activity. This includes items such as receipts, tickets or other documentation.
- You should also keep a diary or log of your gambling winnings and losses. You should write down the date, the type of gambling, the name and address of the gambling establishment, the names of people with you and the amounts you won or lost. Your diary will come in handy later, if you are ever audited.
All this stuff can be confusing, so don’t go it alone. Call us, we are here to help with your tax return.