Feature Articles:
Taxes
Gambling Income and Expenses
Reviewed and adapted with special permission from the IRS by: Brenda Procter, M.S., Personal Financial Planning, College of Human Environmental Sciences, University of Missouri Extension
Gambling winnings are fully taxable and must be reported
on your tax return. Gambling income includes, but is not
limited to, winnings from lotteries, raffles, horse and
dog races and casinos, as well as the fair market value
of prizes such as cars, houses, trips or other noncash
prizes.
Depending on the type and amount of your winnings, the
payer might provide you with a Form W-2G and may have
withheld income federal taxes from the payment.
Here are some general guidelines on gambling income and
losses:
- Reporting winnings: The full amount of your gambling winnings for the year must be reported on line 21, Form 1040. You may not use Form 1040A or 1040EZ.
- Deducting losses: If you itemize deductions, you can deduct your gambling losses for the year on line 27, Schedule A (Form 1040). You cannot deduct gambling losses that are more than your winnings.
It is important to keep an accurate diary or similar
record of your gambling winnings and losses. To deduct
your losses, you must be able to provide receipts,
tickets, statements or other records that show the
amount of both your winnings and losses.
For more information see IRS Publication 529,
Miscellaneous Deductions, or Publication 525, Taxable
and Nontaxable Income, both available on the IRS Web
site, IRS.gov, or by
calling 1-800-TAX-FORM (1-800-829-3676).
Source: IRS TAX TIP 2006-33
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Last update: Wednesday, March 12, 2008
