What Form Do I Use To Report Gambling Losses

Posted on 4/8/2022by admin

Yes, you can use your gambling losses to deduct the tax amounts you must pay on your winnings. However, these deductions may not exceed the amount you have won in the first place. One thing to keep in mind is that it’s best to report your winnings and losses generated through gambling. Gambling Losses up to the Amount of Gambling Winnings You must report the full amount of your gambling winnings for the year on Schedule 1 (Form 1040), line 21. You deduct your gambling losses for the year on Schedule A (Form 1040), line 16. You can't deduct gambling losses that are more than your winnings. You can't reduce your gambling winnings.

Six Tips on Gambling Income and Losses

Whether you roll the dice, play cards or bet on the ponies, all your winnings are taxable. The IRS offers these six tax tips for the casual gambler.

Gambling income includes winnings from lotteries, raffles, horse races and casinos. It also includes cash and the fair market value of prizes you receive, such as cars and trips.
If you win, you may receive a Form W-2G, Certain Gambling Winnings, from the payer. The form reports the amount of your winnings to you and the IRS. The payer issues the form depending on the type of gambling, the amount of winnings, and other factors. You’ll also receive a Form W-2G if the payer withholds federal income tax from your winnings.
You must report all your gambling winnings as income on your federal income tax return. This is true even if you do not receive a Form W-2G.
If you’re a casual gambler, report your winnings on the “Other Income” line of your Form 1040, U. S. Individual Income Tax Return.
You may deduct your gambling losses on Schedule A, Itemized Deductions. The deduction is limited to the amount of your winnings. You must report your winnings as income and claim your allowable losses separately. You cannot reduce your winnings by your losses and report the difference.
You must keep accurate records of your gambling activity. This includes items such as receipts, tickets or other documentation. You should also keep a diary or similar record of your activity. Your records should show your winnings separately from your losses.

Proof:

What Form Do I Use To Report Gambling Losses Tax

Bingo and similar games: Keep records of the number of games played, the cost of cards purchased, and amounts collected on winning cards.
Slot machines: Maintain a record of the machine number and all winnings by date and time the machine was played.
Casino table games (e.g., blackjack, craps, poker and roulette): Write down the number of the table where you played and any casino credit information.
Racing (horses, harness, dog, etc.): Keep track of the number of races, the amounts of your wagers and the amounts you won and lost.

For residents of Connecticut, Illinois, Indiana, Kansas, Massachusetts, Michigan, North Carolina, Ohio, Rhode Island, West Virginia, and Wisconsin, beware. These states do not allow amateur gamblers to deduct their losses from their winnings. For example, if an amateur gambler in Ohio wins $50,000 and loses $50,000, they may not deduct their losses even though they technically broke even.

This is not the case if the taxpayer is a professional gambler such as a professional poker player. They may deduct gambling losses from their state income taxes but they are aggressively challenged for their status as professional.

What Form Do I Use To Report Gambling Losses Without

So remember to consider the tax implications for gambling winnings and losses and plan accordingly based on your gambling status and the state you live in.

IRS Resources

Publication 525, Taxable and Nontaxable Income
Publication 529, Miscellaneous Deductions
Tax Topic 419, Gambling Income and Expenses
Form W-2G, Certain Gambling Winnings

IRS YouTube Videos:

Gambling Winnings and Losses – English Spanish ASL
Record Keeping – English Spanish ASL

IRS Podcasts:

Gambling Winnings and Losses – English Spanish