Gambling Taxes: You Have to Report All Your Winnings
Whether it's $5 or $5,000, from the track, an office pool, a casino or a gambling website,
all gambling winnings must be reported on your tax return as "other income" on
Schedule 1 (Form 1040). If you win a non-cash prize, such as a car or a trip, report its fair market value as income.
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Your Gambling Losses Might Be Deductible
There are a couple of important catches, though. First, unless you're a professional gambler (more on that in a second), you have to itemize in order to deduct gambling losses (itemized deductions are claimed on
Schedule A). Unfortunately, most people don't itemize. So, if you claim the
standard deduction, you're out of luck twice — once for losing your bet and once for not being able to deduct your gambling losses.
Second, you can't deduct gambling losses that are more than the winnings you report on your return. For example, if you won $100 on one bet but lost $300 on a few others, you can only deduct the first $100 of losses. If you were totally down on your luck and had absolutely no gambling winnings for the year, you can't deduct any of your losses.
Also, according to the IRS, "to deduct your [gambling] losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses."
If you're a professional gambler, you can deduct your losses as business expenses on
Schedule C without having to itemize. However, a note of caution: An activity only qualifies as a business if your primary purpose is to make a profit and you're continually and regularly involved in it. Sporadic activities or hobbies don't qualify as a business.
