Even casual gambling can impact you at tax time. Don’t take the risk and forget to report any winnings from gaming on your tax return. Money you win is completely taxable and needs to be included at tax time. Lotteries, raffles, casino revenue, and money from horse races are all considered gambling winnings, as well as several noncash items including vacations, cars, or electronics. These items are valued at the fair market price.
To file your taxes with gambling income, you should file Form W-2G, Certain Gambling Winnings, once you have reached the amount that is subject to federal taxes. You can report it as “Other Income” on your Form 1040, including winnings that aren’t subject to taxation. A special tax form, 1040NR U.S. Nonresident Alien Income Tax Return, applies to nonresident aliens with gambling income. You may be required to pay estimated taxes on certain winnings.
If you want to deduct gambling losses, you’ll need to itemize your deductions. You also can’t deduct more than you won. Claim these losses on Form 1040, Line 28, Other Miscellaneous Deduction. This only applies to U.S. citizens, as nonresident aliens are not eligible to deduct gambling losses.
As with all deductions, you will need to keep an accurate record of losses and gains in order to substantiate your claims. You will have to prove the amount of losses by showing receipts, statements, tickets, or other proof that can verify your claim to the deduction.