Log in Subscribe

A few of our stories and columns are now in front of the paywall. We at The Chief-Leader remain committed to independent reporting on labor and civil service. It's been our mission since 1897. You can have a hand in ensuring that our reporting remains relevant in the decades to come. Consider supporting The Chief, which you can do for as little as $3.20 a month.

Tax strategies

Tips on gambling winnings and losses

Posted

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 gambling 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:

• 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.

• If you win a certain amount 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.

According to the IRS, you must report gambling winnings if 1) The winnings (not reduced by the wager) are $1,200 or more from a bingo game or slot machine; 2) The winnings (reduced by the wager) are $1,500 or more from a keno game; 3) The winnings (reduced by the wager or buy-in) are more than $5,000 from a poker tournament; 4) The winnings (except winnings from bingo, slot machines, keno, and poker tournaments) reduced, at the option of the payer, by the wager are: a) $600 or more, and b) at least 300 times the amount of the wager;

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

• Generally, you report all gambling winnings on the “Other income” line of Form 1040, U.S. federal income tax return.

• 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 is lost and cannot be carried forward to future years. Remember, you must itemize to get a gambling loss.

• 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 specializing in personal and small business taxes for 30 years. Any questions can be directed to him at 516-829-7283, or mrbarrytax@aol.com.

Comments

No comments on this item Please log in to comment by clicking here