4 Ace Tips for Reporting Gambling Wins and Losses

There’s a reason folks flock to glitzy locales like Las Vegas, Atlantic City, and even Reno. And it isn’t always the all-you-can-eat buffets.

Here at StopIRSDebt.com, we firmly believe in lowering your risk—on your tax debt, in your audit defense, and even when filing your taxes. But we understand that for some, gambling can be an enjoyable experience when enjoyed responsibly and with moderation.

However, we’re not here to discuss the excitements and many consequences of a visit to the casino.

As you can expect, we’re here to talk about taxes. One place you should never roll the dice is on your tax return. Because if you try to bluff the IRS, trust us: They’ll call your bluff nearly every single time.

Regardless whether you’re a professional poker player or you’ve hit (or lost) the jackpot just enough to be curious, we’re here to give you a few tips for reporting your gambling income.

4 Tips When Reporting Gambling on Your Tax Return

Even if it’s your first time reporting your gambling profits or losses, you might be surprised how simple it is to make sure your tax return completely IRS-compliant!

Stick to these four tips and come out on top.

1. Report Your Winnings and Losses Separately

If you’ve ever reported your investment wins and losses on your tax return, you’re probably used to a certain process. You subtract your losses from your gains, then you report that total. Sound familiar?

Not so fast! Even though gambling winnings and losses may seem similar to investment winnings and losses, you won’t be using the same process to report them. It’s very important to separate your winnings and your losses and itemize them on the correct forms. If you’re worrying that this will somehow adversely affect your tax obligation, rest assured that you’ll get proper credit for the losses you’ve experienced.

As for where, exactly, you’ll need to detail your gambling experiences, keep on reading.

2. Report Your Full Winnings as Income

Professional gamblers have their own set of tax rules to abide by, because most (if not all) of their taxable income within a year will be earned through gambling.

But for our purposes, let’s speak to the more casual gambler. Even if you aren’t a serious, professional gambler, your full winnings are taxable and you need to report them as income.

According to the IRS, “Gambling income includes but isn’t limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes, such as cars and trips.”

In most cases, whoever pays you your winnings should also issue you a Form W-2G, Certain Gambling Winnings. On your 1040, you’ll report your gambling winnings as “Other Income,” and in some cases you may also be required to pay an estimated tax on that income.

In short, think of your gambling winnings as income and report them that way.

3. Report Losses on Schedule A

As we mentioned in our first tip, taxpayers often get tripped up when trying to report gambling losses—mostly because they assume the same rules that apply to reporting your investments also apply to reporting your gambling income. Not true.

Don’t subtract your winnings from your losses. Instead, report your losses separately on Schedule A as “Other Itemized Deductions.”

A couple of key qualifiers:

  1. You can only deduct gambling losses if you itemize your deductions. If you typically take the standard deduction (or if your deductions are less than the standard deduction), you’re not going to benefit from deducting your gambling losses.
  2. You can only deduct gambling losses up to the total gambling income reported on your return. So if you haven’t won, you can’t deduct your losses.

4. Document, Document, Document!

A good rule of thumb when it comes to any itemized deductions you hope to claim on your tax return is to take copious notes and keep thorough records. This is especially true of gambling, as not every single jackpot or lost hand will come with tax forms.

If you’re looking to deduct your losses, the IRS recommends you keep an accurate diary or similar record of your gambling winnings and losses. You should also prepare to provide receipts, tickets, statements, and any other records that can help you show the totals of your winnings and losses.

To sum up, keep a thorough record of your gambling exploits in order to back up your deductions.

Don’t Roll the Dice. Ace Your Gambling Income Reporting.

Gambling income (and losses) aren’t quite the same as investing and employment income. However, the differences that set gambling apart from other types of tax reportable gains and losses aren’t all too difficult to keep track of.

Remember our four tips to reporting gambling wins and losses, and you’ll be sure to maximize your tax savings. That’s one jackpot we can all win!

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