It depends.

Let’s start with winnings. The gross amount of your winnings from casinos, races, lotteries, non cash prizes, etc. are reportable as income. Depending on the amount of winnings, you may receive form IRS Form W-2G Certain Gambling Winnings. All winnings are taxable and should be reported on Schedule 1 (Form 1040), line 8, whether or not you have received form W-2G. The IRS requires a mandatory 24% withholdings on winnings that exceed $5,000.

Winnings and losses from gambling must be reported separately; do not deduct losses from winnings.  Gambling losses can be deducted up to the amount of winnings, not more. They can be claimed as a miscellaneous deduction on Schedule A, Form 1040, if you itemize deductions.

It is important to keep an accurate diary or similar record of your gambling winnings and losses for tax preparation purposes and in case of an audit. The IRS suggests that the diary should contain at least the following information:

• Date and time

• Name of gambling establishment

• Address or location of gambling establishment

• Type of specific wager or wagering activity

• Name(s) of other person(s) present with you at the gambling establishment

• Amount(s) won or lost

To deduct your losses, you must provide receipts, tickets, statements, or other records that show the amount of both your winnings and losses. Such documentation may include IRS Form W-2G Certain Gambling Winnings, IRS Form 5754 Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided by the gambling establishment. You might also want to retain supporting documentation such as hotel bills, airline tickets, and gasoline credit cards.

Though making the log available to your tax preparer when preparing your tax return, you do not need to give the supporting documentation to your tax preparer.

Take Action

• Retain receipts and other documentation to support your winnings and losses

• Maintain a log or diary of your winnings and losses with the details suggested by the IRS. Click to download a simple Gambling Log.