Casual Gambling & Your Taxes
Your gambling income includes money you win betting at horse races, money won at dog races, any type of casino gambling, the lottery, bingo, table games, raffles, private party games, scratch-off tickets, tournaments, prizes, etc. Additionally, your gambling income includes any noncash prizes you win, such as a vacation or car. These prizes will be taxed at fair market value. Your gambling income is always taxable. On your tax return, you must report all gambling winnings. Always itemized your winnings on your tax return—do not report net winnings.
Can I deduct gambling expenses on my tax return
According to the IRS, you can deduct gambling losses from your tax return, but only if you itemize each loss and your expenses are equal to less than your winnings. When you file your return, do not deduct the number of your losses from the number of your winnings and report the difference; each item must be calculated separately. For example, if you won $5,000 in a raffle but lost $1,500 playing table games at a casino, you are not allowed to report a $3,500 gambling income. Instead, report your income as $5,000 and your losses as $1,500.
Keeping the Record Straight
In order to make sure that your tax return is filed accurately and your gambling income correctly recorded, the IRS suggests that you keep a running journal of your wins and losses. Additionally, make sure that you keep any ticket stubs, receipts, and other documentation of your income; you must be able to substantiate your losses if you want to deduct them. In your record, the IRS suggests that you write down the name or the gambling establishment, the date, the amount that you won/lost, and any other information relevant to your income or tax return.