Ohio’s casinos, racetracks and gaming centers give residents numerous in-state gambling options. Wherever gambling takes place, however, participants should be aware that tax consequences may follow.
Q: Do I have to report my gambling winnings on my federal tax return?
A: Yes. Gambling winnings are generally taxable and must be reported your tax return. If you're a casual gambler, you'll generally report your gambling winnings as “other income” on line 21 of IRS Form 1040. Other income 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.
Q: Isn’t it true that I only have to report my winnings if a gaming organization gives me an income tax form?
A: No. It is a common misconception that you don’t need to report gambling winnings on your federal tax return unless you receive a Form W-2G from the payer. In fact, you must report your gambling winnings even if you did not receive documentation when you won the money or prize.
Q: If I have to report all of my gambling winnings anyway, then why bother with Form W-2G?
A: The gaming organization or other payer of gambling winnings must 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. Winners should also receive 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.
Q: If I itemize deductions, can I at least offset my gambling winnings with my losses?
A: Yes, but you can’t deduct gambling losses that exceed your winnings. Also, you can’t simply reduce your gambling winnings by your gambling losses and report the difference. You must report the full amount of your winnings as income, and then claim allowable losses separately. To claim gambling losses up to the amount of your total winnings, use Form 1040, Schedule A, “Itemized Deductions,” under “Other Miscellaneous Deductions.”
If you plan to deduct your gambling losses, you must have receipts, tickets, statements and documentation such as a diary or similar record of your losses and winnings. Your records should show winnings separately from losses. IRS Publication 529, “Miscellaneous Deductions,” provides details about the type of information you should keep in a gambling win/loss diary and the kinds of proof you should keep in your records.
Q: Where can I get more information about gambling income and losses?
A: For more information, see IRS Publication 529 or Publication 525, Taxable and Nontaxable Income. Both publications are available at IRS.gov, or you can call 800-TAX-FORM (800-829-3676). You can also type “gambling” in the IRS.gov search box to find articles about reporting and deducting gambling winnings.
The information for this “Law You Can Use” column was provided by the Internal Revenue Service. It was prepared by the Ohio State Bar Association.