Are Gambling Winnings Taxable?

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Many people gamble for recreation, some even do it for a living.  If you are what the IRS calls a casual gambler, you must remember that whatever you win is taxable.  This includes all forms of gambling, not just casino gambling.  Lotteries, horse and dog races, raffles all fall under the category of gambling.  In fact, even if you win in kind, you are obligated to pay taxes based on the market price of the prize you won.  Click here to read or watch more IRS Help resources.

At certain gambling establishments, the payer may even give you a W-2G to declare your winnings to the IRS or they may deduct your federal income taxes at source.  In any case, you are required to report your winnings.

Losses, on the other hand, are not tax deductible unless you declare and verify them with accurate records.  That means you must be able to provide receipts, tickets, statements or other types of documentary evidence to show both your wins and losses.  List how much your bet was and how much you eventually lost.  The casino will report your occasional winnings to the IRS, so you had better report your losses.  You can itemize your losses on line 28, Schedule A in your 1040.

I know, all this record keeping is no fun.  But if you do not do it, you will end up paying taxes on your winnings but not being able to deduct anything on your losses.

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