Gambling, Wins and Losses
What happens in Vegas, stays in Vegas. Unfortunately, the IRS tends to disagree with that sentiment, especially when it comes to your taxes. Whether you are a consistent gambler or your winnings (or losses) are the result of a one-off weekend trip, the IRS still wants its cut and the result of your trip(s) should be included on your tax forms. Claiming your winnings is a fairly straight-forward of putting down the amount you have won. For gambling losses, you must be able to itemize deductions in order to receive those claims.
I will let Kenny Rogers take it from here.
- Know when to hold ‘em
- Know when to fold ‘em
- Know when to walk away
- Know when to run
As I mentioned above, the IRS wants to know the monetary specifics of your gambling trips. Here are a few tips to keep in mind if you gamble.
- Income from gambling can come from the casino, horse racing, or even the lottery. Non-cash items, such as cars or trips, are considered income as well. For example, if you won a car, you are expected to pay the taxable amount for the going market value of that vehicle.
- In some instances, you may receive Form W-2 G, Certain Gambling Winnings. You should not expect this form every time, but certain establishments will provide them depending on the circumstances. The establishment will also give Form W-2 G if they withhold taxes from your winnings and the IRS will receive a copy of this form as well.
- Report all if your winnings to the IRS. Unless you are a professional gambler, you will generally mark these earnings on your tax return as “Other Income”. This is expected even if you did not receive the Form W-2 G.
- For losses you will use Schedule A, Itemized Deductions. The only catch here is that you cannot deduct more losses than the total of your winnings.
- Keep your receipts! Make sure you are keeping a thorough journal of your wins and losses. Read Publication 525, Taxable and Nontaxable Income, for more info on gambling and Publication 529, Miscellaneous Deductions, for more info on losses and more examples of specific records you will want come tax time.
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