Report the amount of your gambling losses on line 28 of your Schedule A list of itemized deductions. In the space next to line 28, note that the deduction comes from gambling losses. The amount of your loss cannot exceed the amount of your gambling winnings that you reported as taxable income. All winnings from all forms of gambling are taxable and must be declared as income on your tax return. All losses from all forms of gambling are deductible as an itemized deduction for recreational players, limited to the amount of winnings declared. All gambling winnings are reported as 'Other Income' on line 21 of your Form 1040. Your losses, on the other hand, are limited. You only can deduct your losses to the extent of your winnings, says. The IRS requires you to keep a diary of your winnings and losses as a prerequisite to deducting losses from your winnings. For federal purposes, report your winnings and losses (up to as much as you won) on U.S. Form 1040, Schedule 1, and claim them on Schedule A under 'Other Miscellaneous Deductions.' Per IRC § 165 (d) the deduction for gambling losses has been limited.

The IRS views winnings from gambling as taxable income, but did you know that you’re allowed to deduct gambling losses, too? While losing money at a casino or the racetrack does not by itself relieve your tax burden, it can reduce taxes owed for your other winnings, ultimately saving you money.

How to know if you can deduct your gambling losses

Gambling loss deductions save you money by reducing your taxable income. But there’s a trick to this—you can’t claim gambling losses that exceed your winnings, as losses are inextricably linked to your winnings for tax purposes. If you have no winnings to claim, you can’t deduct your losses.

As an example, let’s say that in a given year you went gambling twice, winning $6,000 in one instance, but losing $8,000 in another. In this case, you can only deduct $6,000 from that $8,000 loss. The remaining $2,000 in losses can’t be carried forward or written off. Conversely, if you won more than you lost, you’d owe taxes on the difference between your winnings and losses as “other income”—but at least those taxes would be reduced.

Claiming Gambling Winnings On Taxes

(If you’re a full-time, professional gambler the requirements are different: you will report your earnings like they have resulted from a business, as self-employed income).

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Claiming Gambling Winnings And Losses On Taxes Returns

How to claim gambling losses

Deductible gambling losses can result from online casinos, poker games, sports betting, lotteries, prize draws, horse and dog racing, and even your office fantasy sports pool. To report any of these gambling losses, you’ll be required to itemize your deductions. This makes sense if the total of all your itemized deductions exceeds the standard deduction ($12,400 for taxpayers who are single or are filing separately from their spouse). If you claim the standard deduction, you don’t get the opportunity to reduce taxes for winnings owed by deducting gambling losses.

Keep in mind that you must be able to substantiate any losses you’re claiming, which means you’ll need to keep records of your gambling.

Claiming Gambling Winnings And Losses On Taxes Tax

Track your winnings and losses

You can’t just say “I lost a bunch of money gambling” to the IRS. They require you to provide records of your winnings and losses to back your claim. Therefore, you should keep track of:

• the date and time of your gambling session
• the type of gambling
• the name and location of the gambling venue
• the people you gambled with
• how much you bet, won and lost

Claiming Gambling Winnings And Losses On Taxes Withheld

You should also keep credit cards statements, payout slips, receipts, tickets, bank withdrawal records, and statements of actual winnings. Other documentation can include:

Claiming Gambling Winnings And Losses On Taxes Due

• Form W-2G (typically given or mailed to you by casinos after a big payout)
• Form 5754 (a form for when you’re part of a group that earns money through gambling; you might see one of these if you and your co-workers are cashing in a winning lottery ticket)

Claiming Gambling Winnings And Losses On Taxes Jointly

Do you or someone you know need help with a gambling problem? Call the National Problem Gambling Helpline Network (1-800-522-4700).