Football season is near and that bring out the rookie and pro alike when it
comes to sports gambling. Whether it is
fantasy football or your Super Bowl pool, you need to know that the IRS has
some rules when it comes to gambling winnings.
Whether you roll the dice, bet on the ponies, play cards or enjoy slot
machines, you should know that as a casual gambler, your gambling winnings are fully
taxable and must be reported on your income tax return. You can also deduct
your gambling losses…but only up to the extent of your winnings.
Here are five important tips about gambling and taxes:
1. Gambling income includes, but is not limited to, winnings from
lotteries, raffles, horse races, and casinos. It includes cash winnings and the
fair market value of prizes such as cars and trips.
2. If you receive a certain amount of gambling winnings or if you have
any winnings that are subject to federal tax withholding, the payer is required
to issue you a Form W-2G, Certain Gambling Winnings. The payer must give you a
W-2G if 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;
- Any other gambling winnings
subject to federal income tax withholding.
3. Generally, you report all gambling winnings on the “Other income”
line of Form 1040, U.S. Federal Income Tax Return.
4. You can claim your gambling losses up to the amount of your winnings
on Schedule A, Itemized Deductions, under ‘Other Miscellaneous Deductions.' You
must report the full amount of your winnings as income and claim your allowable
losses separately. You cannot reduce your gambling winnings by your gambling
losses and 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 receipts, tickets, statements and documentation such as a diary
or similar record of your losses and winnings. Refer to IRS Publication 529,
Miscellaneous Deductions, for more details about the type of information you
should write in your diary and what kinds of proof you should retain in your
For more information on gambling income and losses, please schedule an appointment
with your local Liberty Tax office. Good
Disclaimer: Every effort has been taken to provide the most accurate and honest analysis of the tax information provided in this blog. Please use your discretion before making any decisions based on the information provided. This blog is not intended to be a substitute for seeking professional tax advice based on your individual needs.