How to Write Off Gambling Losses on Taxes
The IRS requires you to keep detailed records of your gambling winnings and losses, and to keep any related documents, including receipts, tickets, payment slips, statements, Form W-2G, and Form Gather all forms necessary to calculate the deductible loss. These returns cover a period from and were examined and attested by Baker Tilly, an independent accounting firm. You can only deduct your losses up to the amount of your winnings. You can deduct your losses only up to the amount of your total gambling winnings. Gambling winnings are always taxable, and whether from a casino, a lottery or a contest, the IRS will get its share of taxes due.
If you had a successful night at the slots or poker tables, you're going to have to share some of the lucky proceeds with Uncle Sam.
The Internal Revenue Service generally requires that you report your gambling winnings and losses separately when you file your taxes rather than combining the two amounts. As you gamble during the year, you need to keep records of your winnings and losses so that you can support whatever figures you report on your taxes. The IRS permits you to use per-session recording, which means that instead of recording whether you won or lost each time you pull the slot machine, you can simply record your total for the session.
Your records should include the date and type of gambling, where you gambled and if you gambled with anyone else, such as a home poker game. When figuring your gambling winnings, only include the winnings from each session rather than using losses to offset your gains. You have to include gambling winnings even if you didn't receive a Form W-2G from the casino. This amount gets reported on line 21 of your Form tax return.
To claim your gambling losses, you have to itemize your deductions. Gambling income isn't just cardgames and casinos; it includes winnings from racetracks, gameshows, lotteries, and even Bingo.
Certain special rules apply to gambling income, and there are strict recordkeeping requirements. However, you may be able to deduct gambling losses. Gambling income is almost always taxable income. This includes cash and the fair market value of any item you win. By law, gambling winners must report all of their winnings on their federal income tax returns. Depending on the amount of your winnings, you may receive one or more Forms W-2G, which reports the amount of your winnings, as well as the amount of tax that was withheld, if any.
You will need these forms to prepare your tax return. Remember that, even if you do not get a W-2G, you must report all gambling winnings. If you win a non-cash prize, such as a car or a trip, you will be responsible for paying taxes on the fair market value of each prize. Depending upon the amount of your winnings and the type of gambling, the establishment or payer may be required to withhold income taxes.
You may deduct gambling losses if you itemize your deductions. You can deduct your losses only up to the amount of your total gambling winnings. You must generally report your winnings and losses separately, rather than reporting a net amount. The IRS requires you to keep detailed records of your gambling winnings and losses, and to keep any related documents, including receipts, tickets, payment slips, statements, Form W-2G, and Form You must be able to prove both your winnings and losses if you wish to deduct your losses.
You must report all gambling winnings on your Form When you have gambling winnings, you may be required to pay an estimated tax on that additional income. For information on withholding on gambling winnings, refer to Publication , Tax Withholding and Estimated Tax. You may deduct gambling losses only if you itemize your deductions on Form , Schedule A. The amount of losses you deduct can't be more than the amount of gambling income you reported on your return.
If you're a nonresident alien of the United States for income tax purposes and you have to file a tax return for U. Nonresident Alien Income Tax Return. Refer to Publication , U. Tax Guide for Aliens , and Publication , U.
Tax Treaties , for more information. Also, nonresident aliens of the United States can't deduct gambling losses. To deduct your losses, you must keep an accurate diary or similar record of your gambling winnings and losses and be able to provide receipts, tickets, statements, or other records that show the amount of both your winnings and losses.
Refer to Publication , Miscellaneous Deductions , for more information.