IRS reminds gamblers to report winnings

Tuesday, April 2, 2002 | 10:49 a.m.

Hit a big one lately? The IRS is reminding people that they must report all gambling winnings as income on their tax return.

Gambling income includes winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes.

Depending on the amount of your gambling winnings, the payer may issue you a Form W-2G.

If you have won more than $5,000, the payer may be required to withhold 28 percent of the proceeds for federal income tax.

The full amount of your gambling winnings for the year must be reported on line 21, Form 1040. If you itemize deductions, you can deduct your gambling losses for the year on line 27, Schedule A (Form 1040). Your gambling loss deduction cannot be more than the amount of gambling winnings.

The agency said it is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

For more information on record keeping, see IRS Publication 529, "Miscellaneous Deductions," or Publication 525, "Taxable and Nontaxable Income." You may also want to check out Form W-2G and its instructions.

All are available at the IRS website at www.irs.gov through the "Forms and Publications Finder." You may also order publications and forms by calling 1-800-TAX-FORM (1-800-829-3676).