Gambling Winnings and Losses – What you need to know.

Metro Accounting and Tax Services, CPA is dedicated to ensuring the accounting success of new and existing small businesses. We have created this guide to help small business owners understand the accounting treatment of gambling winnings and losses.

Do you like to gamble?  Who doesn’t, especially when you’re winning.
Gambling income includes winnings from the lottery, horseracing and casinos. It also includes cash and non-cash prizes. You should know that gambling winnings are generally taxable and must be reported on your tax return. Taxpayers must report the fair market value of non-cash prizes like cars and trips to the IRS also.

The payer may issue a Form W-2G, Certain Gambling Winnings to the winning taxpayers based on the type of gambling, the amount they win and other factors. A copy of this form is also sent to the IRS. Taxpayers are also issued a Form W-2G if the payer withholds income tax from their winnings.

All gambling winnings must be reported for the year as income by the Taxpayer. This is shown on the tax return as “Other Income.” This is true even if the taxpayer doesn’t get a Form W-2G from the payer.

If you itemize your deduction, on Schedule A you are able to deduct your gambling losses. It is important to note that gambling losses can only be deducted up to the amount of gambling winnings. If you are going to claim your losses then you are required to keep all related receipts, tickets and statements.

If you are interested in avoiding errors in the classification and reporting of your taxes, contact Metro Accounting and Taxes, CPA today. We provide support with these and other accounting challenges you might face.

User | 15/10/2017