Are gambling winnings taxable?
Are gambling losses tax-deductible?
In a word, yes. But this question requires a bit of a disclaimer before going into any detail: none of us here at ace-ten.com are accountants, attorneys, or tax officials—sowhat follows is based on our own experience, practices, and observations. None of this constitutes a professional service, consult a certified expert, blah blah blah.
That said, gambling winnings must be reported as income, and losses may be taken as itemized deductions (if itemize rather than taking the standardized deduction). You can’t deduct losses in excess of winnings and they don’t carry forward from year to year. Also casino comps are supposed to be included as part of your winnings.
For winnings at slots or keno in excess of a certain amount, the casino is required to present you with a form W2G. While this form is not required for table games regardless of the amount, some casinos will issue them nonetheless. Casinos are also required to report any cash transactions in excess of $10,000—but may, at their discretion, record and report lesser amounts as well. For the most part, however, it’s an honor system and you’re expected to keep your own records.
The best way of keeping track of losses, winnings, and comps is to keep a diary of your gambling that includes places (casino and location), dates, and times along with amounts. This doesn’t need to be sent along with your returns, but should be kept with your tax documents in case of an audit. You should save any other documentation related to gambling,such as tickets, checks, receipts, or markers, as you’ll need them to substantiate your claims in the event of an audit.