Gambling Winnings – Uncle Sam Wants His Share

Gambling Winnings – Uncle Sam Wants His Share

gamblingHow exciting – you just won it big at the slot machines and you are trying to think of how to spend it.  Not so fast.  This is considered income.   You may need to pay taxes on your winnings.

The payer is required to provide you with Form W-2G if you receive certain gambling winnings.  This form is also sent to the IRS.

You are required to report all gambling winnings on Line 21 (Other Income) of Form 1040.

What is considered gambling income?  Income from gambling includes winnings not only from the casinos, but horse racing, raffles and the lottery, too.

What if the income is not in cash?  You must report the fair value of the non-cash prizes you receive.

If you itemize your deductions, you may deduct gambling losses up to the amount of gambling income.  Gambling losses are reported on line 28 (Other Miscellaneous Deductions) of Schedule A.

Make sure you keep a record of your gambling income and losses.

For more information on IRS gambling rules, see IRS Tax Topic 419.

 

 

Colleen Minnich

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