Does Gambling Affect Your Taxes?

Gambling, when it’s done in small ways, like betting on sports or buying a lottery ticket, can be a lot of fun. However, gambling can also have an impact on your taxes, especially if you’re good at it.  

What’s more is that the US Supreme Court recently ruled that sports gambling is legal in most circumstances and in most states, which is bound to lead to a marked increase in sports betting and general gambling. Whether you’re a long-term gambler or a newbie taking advantage of this recent ruling, it is important to know the impact gambling can have on you tax-wise.

Your Winnings Count as Income

When you gamble, your goal is to win big. When you do win, however, it’s not all fun and celebration. There will still be taxes to pay on your earnings.

Any money that you win from any type of gambling is considered income and needs to be counted as such. You even file this income on a special form, Form W2-G, which is made just for claiming gambling wins.

Losses Can Count as Itemized Deductions

If you’re like most people, then you probably lose at gambling more often than you win.

Don’t panic though. If you choose to itemize your deductions, you can deduct your losses too.

Losses can be deducted up to the amount of your winnings. So, in other words, you can deduct losses as long as you have some winnings. Of course, this doesn’t help you if you lost more than you won, but it still provides some possibility of relief.

Just make sure you keep track of your losses in a verifiable way. Whether you’re saving receipts or tickets or just keeping a log, you want to be able to back up your claims. Also, bear in mind that this deduction option only applies to wagering-based gambling experiences.

As you can see, your wins and losses can both matter when it comes to your taxes. If you’re ever confused about how to claim either, just seek the advice of a qualified, professional tax adviser