A Guide to Reporting Gambling Winnings… and LossesAugust 24, 2015
Planning to gamble for the last hurrah of the summer? Make sure you keep a good record of wins and losses for tax purposes.
Squeezing in one last vacation before the summer comes to a close? If you’re planning to gamble at all, there are some helpful tips regarding how taxes affect gambling winnings and how to report winnings on your tax return. Winnings from casinos, lotteries, horse races, and raffles are all taxable and need to be disclosed on your return.
It is important to comply with regulations when it comes to reporting gambling winnings. Things to keep in mind when you’re gambling on vacation:
- Taxpayers must report the fair market value (FMV) of all non-cash prizes won by gambling- whether that be a car, a trip, etc.
- Depending on the amount won and the type of gambling, the payer might provide the winner of a non-cash prize with a Form W-2G, Certain Gambling Winnings, and will send a completed copy of this to the IRS.
- If the payer withholds income tax from your winnings, you will also need to fill out form W-2G.
- Typically winnings are reported as “Other Income” by taxpayers on their yearly tax returns. All gambling winnings must be reported as income even if you do not receive a From W-2G.
- On Schedule A, Itemized Deductions, you can deduct gambling losses, but the amount you deduct is limited to the amount of the gambling income you report on the return.
It helps to keep track of all wins and losses, as well as holding on to receipts, tickets, or statements. It is tough to think seriously when you’re on vacation and having fun at raffles and the slot machines, but in order to deduct losses, you need to have an accurate record or diary of all winnings and losses.
Questions? Contact any member of our Tax Services Team.