How is tax on gambling winnings verses the losses done on tax form?

Beatrice M: How is tax on gambling winnings verses the losses done on tax form?
Is there a different form to fill out on a tax return for gambling winnings versus loses?

Answers and Views:

Answer by Punter P
What you owe the government from a winning bet depends on the type of gambling, the amount you win and the ratio of the winnings to the wager. If you get lucky at the track with a win-place-show and slip up to the big-guy’s window to collect your $ 700 or you win a nifty $ 3,500 playing online slots, craps, bingo or roulette and the casino will need to get your Social Security number to pay off and then inform the IRS of your winnings.
If you hit the big time and collect on the far side of $ 5,000 or more, you will probably have to pay the government their cut right then and there. When talking about slot machines and bingo, payouts of $ 1,200 or more are reported to the IRS, but there is no withholding taken out. If you’re playing Keno, the amount won must be at least $ 1,500.

State lotteries are a different story. Withholding is taken out of all winnings of more than $ 5,000. Pari-mutuel pools, such as horse and dog races, are subject to withholding, but only if the winnings are both more than $ 5,000 and at least 300 times as large as the amount bet.

Most honest casinos will inform the government of your larger winnings and will probably short your winnings by 25% for federal withholding taxes. Being above board a casino will issue you an IRS Form W-2G that shows the amount you won. If you paid taxes on your winnings up front, that will appear on the form also.

You report your winnings from the W-2G or those smaller jackpots on line 21, “Other Income” on IRS Form 1040. You can reduce the amount of money the IRS will tax by reporting your losses as part of your overall itemized deductions. This you find on line 27, “Other Miscellaneous Deductions,” on Schedule A. This is where you report your gambling losses. You can claim up to the total amount of winnings you entered on your 1040. But make sure that if your losses are less than your standard deduction, take the standard deduction and not fill out the Schedule A. If your wagering losses are large enough to help boost your already substantial itemized deductions, then go with the Schedule A. You can keep records of your losses by keeping losing tickets and keeping a log. You can only count as much in losses as you won. If winnings are to be split, as with a lottery pool, winners are reported on IRS Form 5754.

Important note: in Nevada casinos there is no withholding or even reporting of big winnings to the IRS for blackjack, baccarat, craps, roulette or the big-6 wheel.