Gambling Winnings Are Always Taxable Income for Your Return

Any and all gambling winnings are fully taxable and must be reported on your tax return. Here are the top seven facts the Internal Revenue Service wants you to know about gambling winnings.

Gambling income includes 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. This is not the entire list of gambling income but it is a good start for your review.

Depending on the type and amount of your winnings, the payer might provide you with a Form W-2G and may have withheld federal income taxes from the payment. Usually if the value is over one thousand dollars they will provide a W-2G.

The full amount of your gambling winnings for the year must be reported on line 21 of IRS Form 1040; you may not use Form 1040A or 1040EZ. This rule applies regardless of the amount and regardless of whether you receive a Form W-2G or any other reporting form. All W2-G’s are submitted to the government so make sure you account for them on your tax return.

If you itemize deductions, you can deduct your gambling losses for the year on line 28 of 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.

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