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Taxes on gambling winnings in sports

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How to file wins, losses on your return
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How to file gambling wins, losses on your return © Sebastian Gauert/Shutterstock.com

How to file wins, losses on your return

Regardless of how much you win on bets, sports and otherwise, you're supposed to pay taxes on the winnings.

Casual gamblers, those folks who visit casinos a few times a year or buy lottery tickets when the jackpot hits a record amount, are required to report gambling winnings as "other income" on line 21, Form 1040.

Sometimes the amounts won trigger withholding at 25% when the lucky gambler is paid. In other instances, a gambling establishment simply will ask winners for a tax ID (the individual's Social Security number) for tax-reporting purposes.

Form W-2G detailing the winnings and any withholding then is sent to the bettor, as well as the IRS. But even without official documentation, you are legally required to report all your winnings.

Good and bad news

The good news is that gambling losses are deductible. You tally all those bad bets in the "other miscellaneous deductions" section of Schedule A.

Remember, however, that you can only deduct losses to the extent of your gambling winnings. You might be able to zero out your winnings, but if you have more losses than payouts, too bad.

You cannot use your bad betting luck to claim a tax loss on your return.

NEED ADVICE? Find a qualified financial adviser today at Bankrate.com.

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