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Zaher Fallahi, CPA; 5 tax tips on gambling income and losses from the IRS

posted Sep 1, 2016, 10:07 PM by Zaher Fallahi

Report any gambling winnings as taxable income on your tax return. Be sure to itemize to deduct gambling losses up to the amount of your gambling winnings. If you are a casual gambler, these tax tips can help:


1- Gambling income

Income from gambling includes winnings from the lottery, horse racing and casinos. It also includes cash and non-cash prizes. You must report the fair market value of non-cash prizes like cars, merchandise and trips.


2- Payer tax form

 If you win, the payer may give you a W-2G Form, Certain Gambling Winnings. The payer also sends a copy of the W-2G to the IRS. The payer must issue the form based on the type of gambling, the amount you win and other factors. You’ll also get a W-2G Form if the payer must withhold income tax from your winnings.

3- How to report winnings

 You generally report all your winnings on your tax return as “Other Income.”  This is true even if you don’t get a W-2G Form.


4- How to deduct losses

 You can deduct your gambling losses as Itemized Deductions on schedule A. The total you can deduct is limited to the amount of your gambling winnings.


5- Keep gambling receipts

 Be sure to keep records of your winnings and losses. This means keeping items such as a gambling log or diary, receipts, statements or tickets, etc.


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