Do I Need to Report My Gambling Winnings on My Taxes?

On: April 10, 2024

A weekend trip to the casino may be just what you needed to refresh after a long week at work, but what do you do when you hit the jackpot? One of the questions that doesn’t come up as the jackpot alarm sounds but only when the beginning of the new year rolls around is whether you need to report your gambling winnings on your taxes. Working with a professional tax team can help you stay in compliance with the IRS even when you do hit it big at the casino. Instead of sending those thousands or millions over to the IRS, having your ducks in a row with the IRS can keep that money in your pocket. Reporting Your Gambling Taxes Is a Must Whether you are a professional poker mogul or you simply stepped inside the casino once and won, you need to make sure you are properly filing your taxes and making sure that any and all wins and losses are documented appropriately. The IRS is one entity that you do not want to try out your bluff skills with because they are definitely not afraid to challenge you. If you have won or lost a lot of money at the casino, it is recommended that you work closely with a tax professional who can assist you in filing your tax returns properly. A simple misstep, miscalculation, or error can lead to large fines and penalties. How Do I Make Sure I Am IRS Compliant with My Gambling Wins and Losses? Fortunately, making sure you stay compliant with the IRS when it comes to gambling wins and losses is relatively easy, given you do it correctly. Report ALL Your Winnings and Losses – But Do So Separately So, simply take your winnings and subtract your losses and then claim the leftover, right? Not so fast. All winnings and losses must be claimed separately, and they must be reported on the correct forms too. Since other investment gains and losses are claimed opposite of this, it can be confusing for taxpayers to claim their wins and losses from gambling correctly. Report ALL Winnings as Personal Income When it comes to your gambling wins, you want to report them as personal income. While you technically did not receive the money from employment, it still gets claimed as income. The IRS states that gambling income includes any money won through:

• Raffles
• Lotteries
• Casinos
• Horse races
• Non-cash prizes (fair market value is claimed on things such as trips, cars, items, etc.)
• Cash prizes

If you have won money gambling, you should receive a W-2 from whoever paid out the winnings to you. Losses Are Reported on Schedule A This is where many taxpayers get confused and what leads to issues with the IRS. All gambling losses must be reported on a Schedule A form. You should NOT subtract the losses from the winnings and claim the leftover amount as income – this could land you in hot water with the IRS. Of course, there are underlying qualifiers to claim losses on gambling money. Since claiming gambling wins and losses is confusing and particular, it pays to work with a tax professional. Keep Your Documentation It should go without saying but keep your documentation. Always have records of your winnings and losses available to show to the IR?S should you ever get questioned. Leading Tax Group Can Help You File Your Gambling Wins and Losses Correctly Filing taxes is difficult enough and then to add in gambling wins and losses, you are likely going to find yourself confused and struggling to get them done right. The IRS is not afraid to challenge and question your tax return, so it is crucial that you claim your wins and losses in the appropriate places and on the correct forms. At Leading Tax Group, our team of IRS tax experts is experienced in claiming gambling winnings and losses on taxes and can assist you in making sure your taxes are done correctly. Our team is also able to represent you should you find yourself being audited by the IRS. Don’t wait until it is too late and call the experts at Leading Tax Group today to schedule a free tax consultation.