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Gambling Income and losses

IRS reporting of gambling income and losses.

Topic 419 - Gambling Income and Losses

The following rules apply to casual gamblers. Gambling winnings are fully taxable and must be reported on your tax return. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and also the fair market value of prizes such as cars and trips. For additional information, refer to Publication 525Taxable and Nontaxable Income.

A payer is required to issue you a Form W-2G (PDF), Certain Gambling Winnings, if you receive certain gambling winnings or if you have any gambling winnings subject to federal income tax withholding. All gambling winnings must be reported on your Form 1040 (PDF) as "Other Income" (line 21), including winnings that are not subject to withholding. In addition, you may be required to pay an estimated tax on your gambling winnings. For information on withholding on gambling winnings, refer to Publication 505Tax Withholding and Estimated Tax.

You may deduct gambling losses only if you itemize deductions. However, the amount of losses you deduct may not be more than the amount of gambling income reported on your return. Claim your gambling losses on Form 1040, Schedule A (PDF) as an "Other Miscellaneous Deductions" (line 28) that is not subject to the 2% limit. A nonresident alien of the United States cannot deduct gambling losses on Schedule A of Form 1040NR (PDF).

It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529,Miscellaneous Deductions, for more information.

If you are considered a nonresident alien of the United States for income tax purposes and you have to file a tax return, you must use Form 1040NR. Refer to Publication 519U.S. Tax Guide for Aliens, and Publication 901U.S. Tax Treaties, for more information.

Page Last Reviewed or Updated: August 19, 2014

Gary Wilson, CPA​​​​​​​​​​​

Accounting and Tax Preparation                                                 

(614) 361-4760 * Westerville, Ohio 

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