Did you know your gambling winnings are taxable? Whether you bet on the horses or play the slots you must report the winnings on your tax return. And if you weren’t a successful gambler, your losses may be deductible. The following IRS tax tips can help you at tax time.
- Gambling income. Income from gambling includes winnings from the lottery, horse racing and casinos, and includes cash and non-cash prizes. You must report the fair market value of non-cash prizes like cars and trips.
- Payer tax form. If you win, the payer may give you a Form W-2G and will send a copy of the W-2G to the IRS. The payer must issue the form based on the type of gambling, the amount you win and other factors. You’ll also get a form W-2G if the payer must withhold income tax from what you win.
- How to report winnings. You normally report your winnings for the year on your tax return as “Other Income” and must report all your gambling winnings as income, even if you don’t receive a Form W-2G.
- How to deduct losses. You can deduct your gambling losses on Schedule A. The amount you can deduct is limited to the amount of the gambling income you report on your return.
- Keep gambling receipts. Keep track of your wins and losses, such as a gambling log or diary, receipts, statements or tickets.
