Whether you roll the dice, bet on the ponies, play cards or enjoy slot machines, you should know that as a casual gambler, your gambling winnings are fully taxable and must be reported on your income tax return. You can also deduct your gambling losses…but only up to the extent of your winnings.
Here are five important tips about gambling and taxes:
1. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes such as cars and trips.
2. If you receive a certain amount of gambling winnings or if you have any winnings that are subject to federal tax withholding, the payer is required to issue you a Form W-2G, Certain Gambling Winnings. The payer must give you a W-2G if you receive:
• $1,200 or more in gambling winnings from bingo or slot machines;
• $1,500 or more in proceeds (the amount of winnings minus the amount of the wager) from keno;
• More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament;
• $600 or more in gambling winnings (except winnings from bingo, keno, slot machines, and poker tournaments) and the payout is at least 300 times the amount of the wager; or
• Any other gambling winnings subject to federal income tax withholding.
3. Generally, you report all gambling winnings on the “Other income” line of Form 1040, U.S. Federal Income Tax Return.
4. You can claim your gambling losses up to the amount of your winnings on Schedule A, Itemized Deductions, under ‘Other Miscellaneous Deductions.’ You must report the full amount of your winnings as income and claim your allowable losses separately. You cannot reduce your gambling winnings by your gambling losses and report the difference. Your records should also show your winnings separately from your losses.
5. Keep accurate records. If you are going to deduct gambling losses, you must have receipts, tickets, statements and documentation such as a diary or similar record of your losses and winnings. Refer to IRS Publication 529, Miscellaneous Deductions, for more details about the type of information you should write in your diary and what kinds of proof you should retain in your records.
For more information on gambling income and losses, see IRS Publication 529, Miscellaneous Deductions, or Publication 525, Taxable and Nontaxable Income, both available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).
The Internal Revenue Service is seeking community volunteers to provide free tax help to qualified individuals during the tax filing season.
Managed by the IRS, the Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs are community based partnerships that provide free tax return preparation for low-to-moderate income taxpayers, seniors, people with disabilities and those with limited English skills. If you are looking for a way to help in your community, then consider becoming a tax volunteer. People helping people – it’s that simple.
Here are 10 things the IRS wants you to know about becoming a community volunteer for VITA or TCE.
1. No previous experience is required. Volunteers receive specialized training and – if tax preparation is not preferable – have the option of serving in a variety of other roles.
2. If you are fluent in a language other than English, you can help those who do not speak English understand their tax return.
3. IRS provides free tax law training and materials needed to prepare basic individual income tax returns.
4. Volunteers become familiar with deductions, allowable expenses and credits that benefit eligible taxpayers, such as the Earned Income Tax Credit, the Child Tax Credit and the Credit for the Elderly.
5. The hours are flexible. Volunteers generally serve an average of three to four hours per week from mid-January through the tax filing deadline, which is April 15, 2013.
6. Volunteer sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations.
7. Most VITA/TCE sites offer free electronic filing for both federal and state tax returns.
8. As a tax volunteer, veterans (and non-veterans alike) may choose to help military personnel and their families.
9. Volunteers will become part of an established program that has helped community members file tax returns at no charge for more than four decades.
10. You can make a difference as a tax volunteer.
Last year nearly 99,000 community volunteers answered the call and made a difference by preparing over 3.3 million tax returns for free at more than 13,000 locations nationwide. Anyone can volunteer for this exciting, educational and enjoyable experience. Sign up to become a tax volunteer and see what a difference learning about taxes and helping others makes in your life.
Additional information about becoming a VITA or TCE volunteer is available on IRS.gov by typing the key words “tax volunteer” in the search box. Those interested must submit Form 14310, VITA/TCE Volunteer Sign Up, by email through the IRS website.
• VITA/TCE Volunteer Sign Up Form 14310 (PDF)
• Volunteer in Your Community
• People Helping People
• Free Tax Return Preparation for You by Volunteers
• Partner and Volunteer Resource Center
• Tax Counseling for the Elderly