While we're asking tax questions.
I won $2500 last year. Do I even need to report that? I'm pretty sure I lost just as much.
Just want to add that I did it using Turbo Tax one year and the return was the same as if I would've gone to a pro. But then again my tax return is simple.
You are supposed to report all gambling winnings. You cannot report
more of a loss in any given year than you gained. You cannot carry
over losses. I.e. if you gambled and won $3K in 2009 but also had
$10K in losses in 2009, for a net loss of -$7K, you will only be able
to write off $3K of the losses against the $3K in gains to show a net
break-even. Furthermore, once 2010 starts, you have a clean slate
as far as gambling income/losses is concerned, the extra $4K in losses
from 2009 doesn't carry over.
This doesn't seem fair, but that is the way the tax law is written.
http://www.irs.gov/taxtopics/tc419.html
Topic 419 - Gambling Income and Losses
The following rules apply to casual gamblers. Gambling winnings are fully taxable and must be reported on your tax return. You must file
Form 1040 (PDF) and include all of your winnings. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and also the fair market value of prizes such as cars and trips. For additional information, refer to
Publication 525,
Taxable and Nontaxable Income.
A payer is required to issue you a
Form W-2G (PDF) if you receive certain gambling winnings or if you have any gambling winnings subject to Federal income tax withholding. All gambling winnings must be reported, including winnings` that are not subject to withholding. In addition, you may be required to pay an estimated tax on your gambling winnings. For information on withholding on gambling winnings, refer to
Publication 505,
Tax Withholding and Estimated Tax.
You may deduct gambling losses only if you itemize deductions. Claim your gambling losses as a miscellaneous deduction that is not subject to the 2% limit on
Form 1040, Schedule A (PDF). However, the amount of losses you deduct may not be more than the amount of gambling income reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to
Publication 529,
Miscellaneous Deductions, for more information.