Plan ahead by keeping an accurate gambling journal of your winnings and losses. Good records will reduce your tax bite if you have a large win.
In your journal, register the amount you won or lost, the date, the name and address or website address of the gambling establishment. Include the type of wager and be specific. For example, "Lost $10 on Rising Son in the 4th race at Hialeah."
Declare all of your gambling winnings on line 21 of IRS Form 1040. Include any winnings reported to you on Form W-2G, which is also supplied to the IRS by the gambling establishment that sends it to you.
Include any amount that was withheld for taxes by the gambling establishment in the total amount you enter for line 64, "Federal income tax withheld from Forms W-2 and 1099," on IRS Form 1040.
Verify your gambling losses with documents such as originals or copies of lottery and KENO tickets purchased, racing and other wagering tickets, credit card records, canceled checks, bank withdrawal records, records of casino slot machine numbers and table numbers where you gambled. Including any statements of winnings and payments made to you by gambling establishments.
Declare all of your gambling losses under "Other Miscellaneous Deductions" on line 27 of IRS Schedule A (Form 1040). This amount may not exceed your declared gambling winnings on line 21 of IRS Form 1040.
Use IRS Form 5754, "Statement by Person(s) Receiving Gambling Winnings," if the tax liability for your gambling winnings is shared by others.
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