Whether you like to play bingo, poker, the lottery, the ponies, the slots, or roll the dice, your gambling winnings are taxable. You must report all your gambling income on your tax return. Here are some basic facts to remember:
- Gambling income. Gambling income includes not only winnings from organized gambling activities such as lotteries, horse racing and casinos, but it also includes cash prizes and the fair market value of prizes like cars and trips, as well as casual income from gambling.
- Payer tax form. If you win, you may get a Form W-2G, Certain Gambling Winnings, from the payer. The IRS also gets a copy of the W-2G. The payer issues the form depending on the type of game you played, the amount of your winnings and other factors. You’ll also get the form if the payer withholds taxes from what you won. Whether you receive the form or not, your gambling winnings remain taxable.
- How to report winnings. You normally report your winnings for the year on your tax return as ‘other income’ on Line 21 (for 2013) of Form 1040.
- How to deduct losses. You can deduct your gambling losses on Form 1040, Schedule A, Itemized Deductions, Line 28 (for 2013). The amount you can deduct is limited to the amount of the gambling income you report on your return. Gambling losses (gambling losses
include, but are not limited to, the cost of non-winning bingo, lottery, and raffle tickets), but only to the extent of gambling winnings reported on Form 1040, Line 21 (for 2013).
- Keep gambling receipts. You should keep track of your wins and losses. This includes keeping items such as a gambling log or diary, receipts, statements or tickets.
Applicable IRS Resources:
- Tax Topic 419, Gambling Income and Expenses
- Publication 525, Taxable and Nontaxable Income
- Publication 529, Miscellaneous Deductions.
DISCLAIMER: This information is extracted with permission from IRS releases. We are not responsible for the application of this general information to the specific circumstances of a reader unless we have been engaged as the reader’s tax preparer.
ASSISTANCE: If you need help in preparing your income tax returns, Roy & Associates, PC may be able to be of assistance. Our firm and its predecessor firms have been providing tax services to individuals and small businesses in southwestern Pennsylvania since 1942. You may make an appointment with one of our Directors of Audit and Tax Services, all of whom are well-versed in personal income taxation. See the CONTACTS page above. Standard rates and terms for service will apply.