The Gambler's Tax Guide

money bagWhile everyone else is bidding farewell to summer and heading back to school, I am jumping out of my skin excited! I’m what you would call one of those insanely crazy football fans. You know, the one who gets a lot of stares. August means one thing to me - fantasy football. Time to review my picks and beat the boys at their own game!  

Beating your friends in fantasy football every year leaves one with many bragging rights (although, not many friends). Just don’t forget to count your winnings at tax time – or those friends may get the last laugh!

All gambling earnings are considered taxable income by the IRS. To make sure that you are following IRS guidelines in filing your earnings correctly, here are a few things you should know:

  1. Whether you have magically hit the lottery or earned some extra cash from a workplace bet, you have to report ALL of your gambling winnings on your tax return. This goes for non-cash prizes, too!
  2. Keep an eye out for Form W-2G in the mail because you will most likely receive this from the payer of your winnings. A copy of this goes to the IRS, as well, so be sure to include your earnings under the “Other Income” line of your return. If you don’t receive this form, record your earnings anyway.
  3. If you are down on your luck, gambling losses can be deducted. This may prove to be confusing and difficult so it is best to ask your tax preparer to assist you.
  4. Keep all documentation of your gambling activities. Better to be safe than sorry!

See more information regarding gambling earnings on IRS Publication 525 or Publication 529. Or visit a local Liberty Tax office and we’ll be glad to help you decipher the information.

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.  

Posted To: Tax Mommy's Blog By: Stephanie Brenneman On: Monday, August 26, 2013
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