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IRS Helpful Tips About Gambling Winnings and Losses

posted Aug 6, 2017, 9:33 AM by Zaher Fallahi

IRS Helpful Tips About Gambling Winnings and Losses

 

Taxpayers must report all gambling winnings as income and must be able to itemize deductions to claim any gambling losses on their tax return. Here are the helpful IRS tips for taxpayers who gamble to know:

 

Gambling income

Income from gambling includes winnings from the:

(a) lottery

(b) horseracing

(c) casinos and

(d)  Cash and non-cash prizes. Taxpayers must report the fair market value of non-cash prizes like cars and trips to the IRS.

 

Payer tax form

The payer may issue a Form W-2G, Certain Gambling Winnings, to winning taxpayers based on the type of gambling, the amount they win and other factors. The payer also sends a copy of the form to the IRS. Taxpayers should also get a Form W-2G if the payer withholds income tax from their winnings.

 

How to report winnings

Taxpayers must report all gambling winnings as income and they normally should report all gambling winnings for the year on their tax return as “Other Income.” This is true even if the taxpayer doesn’t get a Form W-2G.

 

How to deduct losses

Taxpayers are able to deduct gambling losses on Schedule A, Itemized Deductions, but keep in mind, they can’t deduct gambling losses in excess of their winnings.

 

Keep gambling receipts

Keep records of gambling wins and losses. This means gambling receipts, statements and tickets or by using a gambling log or diary.

 

Zaher Fallahi, CPA, Tax attorney, advises taxpayers including Americans-living abroad, with their taxes, IRS representation, foreign accounts (FBAR, FATCA, OVDP). Telephones (310) 719-1040 (Los Angeles), (714) 546-4272 (Orange County), or e-mail totaxattorney@zfcpa.com

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