Many casual gamblers find themselves asking, “do I need to pay taxes on my gambling winnings?” The often-surprising answer is “yes.”
How to Record Gambling Earnings
Taxpayers typically assume that they are only obligated to pay taxes on gambling winnings if the casino issues them a W-2G form — this is not always the case. Casinos will typically only issue a W-2G once you have met a certain threshold, which varies based on different games. However, regardless of the dollar amount, you as the taxpayer are responsible for recording all gambling winnings.
Your gambling winnings can be recorded as “Other Income” on Schedule 1 of your Individual Tax Return (Form 1040). If you win a non-cash prize such as a car, or a trip, report the fair market value as income.
Can I deduct gambling losses?
Gambling losses may be deducted on Schedule A only if you itemize your deductions instead of taking the standard deduction. In the event you decide to itemize your deductions and account for gambling losses, you may not deduct more than your winnings. You can claim your gambling losses up to the amount of your winnings as “Other Itemized Deductions.”
Recordkeeping: What You Need to Know
To deduct your losses, it is essential to keep accurate records of your losses and winnings to have documented proof of each. Records may include (but are not limited to) receipts, statements, and tickets.
Contact Leone, McDonnell & Roberts For More Information
If you’re struggling to make sense of claiming your gambling winnings, Leone, McDonnell & Roberts can help. Contact us to discuss your questions with one of our skilled and experienced accounting professionals today!