IRS Offers Tips for Ohio Gamblers Who Win
COLUMBUS, Ohio -- Ohioans have three home-grown options for casino gambling, with a fourth casino expected to open next spring. Whether gambling takes place at one or more of the state’s casinos, racetracks, or elsewhere, tax consequences may follow.
“Gambling income, like any other income not specifically exempted, is generally taxable,” said Jennifer Jenkins, IRS spokeswoman. “That includes winnings from lotteries, raffles, horse races and casinos. It also includes cash winnings and the fair market value of prizes, such as cars and trips.”
Organizations that sponsor gambling are required to issue Form W-2G, Certain Gambling Winnings, to winners under several circumstances. If the gambling winnings are subject to federal income tax withholding, for instance, the payer should issue the winner a Form W-2G. Gamblers should also receive the forms when they have:
- $1,200 or more in winnings from bingo or slot machines.
- $1,500 or more in proceeds (the amount of winnings minus the amount of the wager) from keno.
- More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament.
- $600 or more in winnings (except those from bingo, keno, slot machines and poker tournaments) and the payout is at least 300 times the amount of the wager.
“It’s a common misconception that unless you receive a Form W-2G, you don’t need to report gambling winnings on your federal tax return,” Jenkins noted. “Actually, gambling winnings must be reported. That’s regardless of whether documentation was provided at the time the money was won. Gambling winnings are normally reported on the Other Income line (line 21) of Form 1040, U.S. Federal Income Tax Return.”
Gamblers who itemize deductions may be able to offset gambling winnings with their losses -- but only to a point. “Claim gambling losses up to the amount of total winnings on Form 1040, Schedule A, Itemized Deductions, under Other Miscellaneous Deductions," Jenkins said. "You can’t simply reduce your gambling winnings by your gambling losses and report the difference. Report the full amount of the winnings as income and claim allowable losses separately. Don’t deduct gambling losses that exceed winnings.”
Gamblers who plan to deduct their losses must have receipts, tickets, statements, and documentation such as a diary or similar record of their losses and winnings, she added. The records should show winnings separately from losses. IRS Publication 529, Miscellaneous Deductions, provides details of the type of information to keep in a gambling win/loss diary and the kinds of proof that gamblers should retain in their records.
For more information on gambling income and losses, see IRS Publication 529 or Publication 525, Taxable and Nontaxable Income, both available at http://www.irs.gov or by calling 800 829 3676.
Published by The Business Journal, Youngstown, Ohio.