IRS tips for gamblers
COLUMBUS – Ohioans now have three home-grown options for casino gambling, with a fourth facility expected to open next spring. Whether gambling takes place at one or more of the state’s casinos, racetracks, or elsewhere, tax consequences may follow.
“Gambling income, like any other income not specifically exempted, is generally taxable,” said Jennifer Jenkins, IRS spokesperson for Ohio. “That includes winnings from lotteries, raffles, horse races, and casinos. It also includes cash winnings and the fair market value of prizes, such as cars and trips,” she said.
Gaming organizations are required to issue Form W-2G, Certain Gambling Winnings, to winners under certain circumstances. For example, if the gambling winnings are subject to federal income tax withholding, the payer should issue the winner a Form W-2G. Gamblers should also receive the forms when they have:
• $1,200 or more in gambling winnings from bingo or slot machines;
• $1,500 or more in proceeds (the amount of winnings minus the amount of the wager) from keno;
• More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament;
• $600 or more in gambling winnings (except winnings from bingo, keno, slot machines, and poker tournaments) and the payout is at least 300 times the amount of the wager.
“It’s a common misconception that unless you receive a Form W-2G, you don’t need to report gambling winnings on your federal tax return,” said Jenkins. “Actually, gambling winnings must be reported. That’s regardless of whether or not documentation was provided at the time the money was won. Gambling winnings are normally reported on the Other income line (line 21) of Form 1040, U.S. Federal Income Tax Return.”
Gamblers who itemize deductions may be able to offset gambling winnings with losses - to a point. “Claim gambling losses up to the amount of total winnings on Form 1040, Schedule A, Itemized Deductions, under Other Miscellaneous Deductions. You can’t simply reduce your gambling winnings by your gambling losses and report the difference -- report the full amount of the winnings as income and claim allowable losses separately. Don’t deduct gambling losses that exceed winnings,” Jenkins said.
Gamblers who plan to deduct gambling losses must have receipts, tickets, statements, and documentation such as a diary or similar record of their losses and winnings. The records should show winnings separately from losses. IRS Publication 529, Miscellaneous Deductions, provides details about the type of information to keep in a gambling win/ loss diary and the kinds of proof that gamblers should retain in their records.
For more information on gambling income and losses, see IRS Publication 529 or Publication 525, Taxable and Nontaxable Income, both available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).