Whether you roll the dice, bet on the ponies, play cards or enjoy the slot machines, you should know that as a casual gambler, your winnings are fully taxable and must be reported on your income-tax return. You can also deduct your gambling losses, but only up to the extent of your winnings.

Here are five important tips about gambling and taxes:

  1. Gambling income includes winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and fair-market value of prizes such as cars and trips.
  2. If you receive a certain amount of gambling winnings or if you have any winnings subject to Federal tax withholding, the payer is required to issue you a Form W-2G, Certain Gambling Winnings.

For example, this occurs if you win:

  • $600 or more if that amount was at least 300 times the wager;
  • $1,200 or more from bingo or slot machines;
  • $1,500 or more from keno;
  • more than $5,000 from a poker tournament.

On the Form W-2G, Federal taxes are withheld at a flat rate of 24 percent.

  1. Generally, you report all gambling winnings on the "Other income" line of Form 1040, U.S. Federal Income Tax Return.
  2. You can claim your gambling losses up to the amount of your winnings on Schedule A, Itemized Deductions, under "Other Miscellaneous Deductions." For example, you win a total of $1,500 in various gambling activities and lose a total of $2,000. You can deduct $1,500 of losses to offset your winnings. The excess $500 in losses cannot be carried forward to future years. Remember, you must itemize to get a gambling loss.
  3. Keep accurate records. If you are going to deduct gambling losses, you must have receipts, tickets, statements and documentation of your losses and winnings.

Before you celebrate the "big win," put some money aside for Uncle Sam, because if you win, he wins! Refer to IRS Publication 529, "Miscellaneous Deductions," for more details and information.

Barry Lisak is an IRS Enrolled Agent, meaning that he has passed special U.S. Treasury Department exams that qualify him to represent clients dealing with audits or tax-resolution cases. Any questions can be directed to him at (516) TAX-SAVE, or mrbarrytax@aol.com.

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