Expert Tips: Tax Reporting for Gambling Winnings (2024)

Congratulations you just won a bunch of money at the casino, lottery, sweepstakes… whatever… How do I report those on your taxes?
In this video I will walk you through the in's and outs of tax reporting gambling winnings and losses on your tax return.
* Rule #1 -First thing to know - your IRS gambling winnings are TAXABLE whether you receive a standard IRS notice or not. That income is taxable income to you.
* In most cases if you have casino winnings or a money received from a lottery or slot machine, at the end of the year you are going to be issued Gambling W2 or W2-G.
* You need to keep track of your winnings AND LOSSES.
* Rule #2 - You can offset your gambling winnings with your gambling losses, but you have to keep good proof. The IRS court expect you to maintain a "contemporaneous gambling diary" to offset your losses.
* These losses are reported on Schedule A - YOU MUST BE ITEMIZING TO CAPTURE ANY SIGNIFICANT GAIN
* Rule #3 - there are no net losses from gambling. If your losses exceed your winnings there is no deduction on your personal tax return and no carry forward of those losses to future years.
* Example: If you won $10,000 on a slot machine and were issued a W2-G for that amount, but you have proof of $15,000 worth of bets and losses. You would only be able to write of up to $10,000 in losses for the given year.
* Are you a Professional Gambler?
* If so you may be able to record those losses on Schedule C which would carry forward to your 1040 as a loss and reduce your overall total income for that year.
* In addition to gambling losses you can also write off things like travel, meals, and other expenses against your winnings as if you were conducting a business that was exclusively done for gambling.
* However - if you are going to show a profit as a "Professional" you will also be required to pay Self Employment Tax on your 'earnings' each year - 15.3% on top of your normal income tax rate.
* Theres the Ying and the Yang to getting the write off.
* Professional Gamblers do the following:
* Spend upwards of 40+ hours per week trying to earn income from placing bets or gambling
* Conduct gambling in a business like manner
* Make profits in the years in question.
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