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Can I write off my gambling losses? Do I have to claim my gambling income?

By Andrea MacDonald, CPA

The IRS expects you to report all of your gambling winnings, whether you receive a tax form or not. Gambling losses are tax deductible, but only to the extent of your winnings. However, the losses are only deductible if you itemize your deductions. If you take the standard deduction, you cannot reduce your taxable income by your gambling losses.

What do I need to keep track of?

  • Lotteries
  • Raffles
  • Horse and dog races
  • Casino games
  • Poker games
  • Sports betting
Card game with poker chips

What should my log include?

  • Date and type of gambling in which you engaged
  • Name and address of the places where you gamble
  • People you gambled with
  • Amount you win and lose

What if the IRS requests proof, and what can I provide?

  • Form W-2G
  • Form 5754
  • Wagering tickets
  • Canceled checks or credit records
  • Receipts from the gambling facility

So, if I can only write off losses up to the amount of my winnings, what happens to the extra losses?

  • Sadly, you do not get to carry those forward to future years. This deduction is a “use it or lose it” deduction.

Do I really have to report the winnings and the losses separately or can I net the amount and report that?

  • The IRS does not allow you to net your winnings and losses together.
  • You must report your gambling winnings on the front of your 1040, and the gambling losses on your Schedule A – Itemized deductions (but again, only if you itemize).

What is a Form W-2G? What is a Form 5754?

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Andrea MacDonald, CPA is the owner of Pro Tax & Accounting in Chesapeake, Virginia. For nearly two decades, she has been working with businesses on their bookkeeping, accounting, and taxes. She also works with individuals and families on their tax returns. Andrea is a Certified Public Accountant (CPA) and a qualified bookkeeper and tax professional. She is well-versed in tax law, which makes her an invaluable resource for any business. 

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