The House Always Wins
by Bob Williams
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The one thing you can always count on, whether you’re at the horse track, the casino roulette table, or just cruising the slots, is the fact that the house always wins. If you win or lose – the casino or track always gets its cut.
The same can be said of the IRS.
Let’s cut to the chase: If you win money from any gambling endeavor – lotteries, bingo, horse racing, casinos or sports betting – it’s taxable. This includes cash prizes and the fair market value of prizes like cars and vacations.
All Your Cards on the Table
If you win, you may get Form W-2G – Certain Gambling Winnings from the casino or track. The IRS also gets a copy. The payer (the casino, track or bingo hall) issues the form depending on the type of game you played, the amount you won and other factors. You’ll also get the form if the house withheld taxes from your winnings.
You must report all your gambling winnings, however, even if you don’t receive a W-2G. In that case, add our 1040 – Income Section screen to your tax return, and enter your gambling winnings on line 21.
Reporting Your Losses
If you itemize deductions, you can deduct your gambling losses on our Other Misc. Deductions screen. But you can only deduct up to the amount of winnings reported on your return.
In order to make things easier at tax time (and to show the IRS should they have any questions later), it’s always a good idea to keep good records of your winnings and losses. The IRS suggests keeping a gambling log or diary, as well as hanging on to receipts, statements or tickets.
For more information on reporting gambling proceeds, check out IRS Tax Topic 419 – Gambling Income and Expenses.
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