By Roger Chartier

United States of America IRS Tax Information

When Roger has some spare time, he posts here. Good articles!


Five Tax Tips About Gambling

Five ball -

Play and win in a card game, bet on a horse race or slot machines it doesn't matter, when you win, you have to pay tax on the winnings.

The winnings are totally taxable so you will have to report them on your income tax return. The amount that you have won in a year is the total amount that could be deductible if you can legally deduct that amount. The IRS informs us that:

1. Gambling income includes but is not limited to, winnings from card games, casinos, lotteries, raffles, and horse races, etc..

It includes the fair market value of prizes such as cars and trips and all cash winnings.

2. Use the “Other income” line of Form 1040, U.S. Federal Income Tax Return to report your winnings.

3. If you receive a certain amount of gambling winnings or if you have any winnings that are subject to federal tax withholding, the payer has to give you a Form W-2G, the form is called "Certain Gambling Winnings". It is given when you receive:

  • $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; or
  • Any other gambling winnings subject to federal income tax withholding.

4. You can claim what you have lost in gambling up to the amount of what you have won on Schedule A, Itemized Deductions, under Other Miscellaneous Deductions.
You do have to report the entire amount of your winnings as income. Afterwards, you can claim your allowed losses separately.

You can't reduce your gambling winnings by your gambling losses and then just report the difference. Your records should also show your winnings separately from your losses.

5. Keep accurate records. If you are going to deduct gambling losses, you must have the tickets, receipts, statements and documentation. Documentation could be a diary or some other similar kind of recorded piece of information about your losses and winnings.

Rrefer to the IRS

Refer to IRS Publication 529, Miscellaneous Deductions, for more information and details about the kind of information you should write in your diary and what kinds of proof you should retain in your records.

For more information on the gambling income and the losses see that IRS Publication 529.

Check on the Publication 525, Taxable and Nontaxable Income.

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