Gambling win/loss
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The following rules apply to casual gamblers who aren't in the trade or business of gambling. Gambling winnings are fully taxable and you must report the income on your tax return. Gambling income includes but isn't limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes, such as cars and trips.
Gambling Winnings
A payer is required to issue you a Form W-2G, Certain Gambling Winnings if you receive certain gambling winnings or have any gambling winnings subject to federal income tax withholding. You must report all gambling winnings on Form 1040 or Form 1040-SR (use Schedule 1 (Form 1040)PDF), including winnings that aren't reported on a Form W-2GPDF. When you have gambling winnings, you may be required to pay an estimated tax on that additional income. For information on withholding on gambling winnings, refer to Publication 505, Tax Withholding and Estimated Tax.
Gambling Losses
You may deduct gambling losses only if you itemize your deductions on Schedule A (Form 1040) and kept a record of your winnings and losses. The amount of losses you deduct can't be more than the amount of gambling income you reported on your return. Claim your gambling losses up to the amount of winnings, as "Other Itemized Deductions."
Nonresident Aliens
If you're a nonresident alien of the United States for income tax purposes and you have to file a tax return for U.S. source gambling winnings, you must use Form 1040-NR, U.S. Nonresident Alien Income Tax Return along with Schedule 1 (Form 1040)PDF to report gambling winnings. Refer to Publication 519, U.S. Tax Guide for Aliens and Publication 901, U.S. Tax Treaties for more information. Generally, nonresident aliens of the United States who aren't residents of Canada can't deduct gambling losses.
See As a Nonresident Alien, Are My Gambling Winnings Exempt From Federal Income Tax? to find out if your gambling winnings are exempt from federal income tax.
For additional information on withholding on gambling winnings, refer to Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities.
Recordkeeping
To deduct your losses, you must keep an accurate diary or similar record of your gambling winnings and losses and be able to provide receipts, tickets, statements, or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions for more information.
Additional Information
For additional information, refer to Publication 525, Taxable and Nontaxable Income or review How Do I Claim My Gambling Winnings and/or Losses?
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Hi Andry,
The FreeTaxUSA software support reporting gambling winnings and losses. Some winnings are reported on a W-2G: Gambling Winnings. See the Uncommon Income section of the software. You can deduct gambling losses as an itemized deduction up to the amount of gambling winnings.
If you had winnings not reported on a W-2G, then go to the Other Income page and report those winnings on the line for Gambling Winnings Not Reported on a W-2G.
Report the gross winnings and the gross losses and the software will report those amounts on your return.
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