What this line means
All gambling winnings for the year, including casino games, lottery, sports betting, horse racing, poker tournaments, raffles, and bingo. Gambling income is taxable regardless of whether you receive a Form W-2G. If a casino or sportsbook issued a W-2G, that amount goes here along with any other gambling winnings not reported on a W-2G.
Does this apply to you?
- You won money at a casino, racetrack, or through a lottery
- You received one or more Forms W-2G for gambling winnings
- You won money through online sports betting or fantasy sports
- You won a raffle prize, bingo game, or poker tournament
- You had any gambling winnings during the year, regardless of amount
Easy to overlook
All winnings are taxable, not just amounts on a W-2G A W-2G is only issued when winnings exceed certain thresholds — $1,200 for slots and bingo, $1,500 for keno, $5,000 for poker tournaments, and $600 for other wagers if the payout is at least 300 times the bet. 1 Winnings below these thresholds are still taxable. A $500 sports bet payout or a $200 blackjack session profit must be reported even though no W-2G was issued. IRS Publication 525 — Taxable and Nontaxable Income
Gambling losses can only offset winnings, and only if you itemize You can deduct gambling losses on Schedule A, but only up to the amount of gambling winnings reported on this line. If you won $3,000 and lost $5,000, your deduction is capped at $3,000. You cannot use the extra $2,000 loss to offset other income. And if you take the standard deduction instead of itemizing, you get no loss deduction at all — the full $3,000 in winnings is taxable. 2 CP2000 pattern — unreported W-2G gambling winnings
Keep session-based records to substantiate wins and losses The IRS requires contemporaneous records of each gambling session: date, type of wager, name and location of the establishment, names of others present, and amounts won or lost.3 A lump statement like “I lost $5,000 at casinos this year” does not satisfy the record-keeping requirement. Without session-by-session logs, the IRS disallows loss deductions on audit. Courts have consistently upheld disallowance when taxpayers cannot produce a diary or similar records documenting individual sessions. IRS Publication 525 — Taxable and Nontaxable Income
Watch out for this
Netting gambling winnings and losses and reporting only the net amount. The IRS requires you to report all winnings as income on this line and claim losses separately on Schedule A. Reporting a net number understates your income and denies the IRS the ability to match W-2G forms to your return. A W-2G that does not appear on your return triggers a CP2000 notice.
Footnotes
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IRS Publication 525, Taxable and Nontaxable Income, Gambling Winnings. https://www.irs.gov/pub/irs-pdf/p525.pdf ↩
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IRS Publication 529, Miscellaneous Deductions, Gambling Losses. https://www.irs.gov/pub/irs-pdf/p529.pdf ↩
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IRS Publication 529, Miscellaneous Deductions, Record Keeping for Gambling. https://www.irs.gov/pub/irs-pdf/p529.pdf ↩