You may have gotten lucky at the track or by scratching off a lottery ticket, but your winnings are still taxable. Assuming you're not a professional gambler, you should report your winnings as “other income” on line 21, Form 1040. You can report any gambling losses on line 27, Schedule A, Form 1040. Keep in mind, you can only claim losses up to the point that they offset your winnings. Full-time gamblers may deduct losses as business expenses even if they place wagers only for themselves. To be considered engaged in a business, a gambler must prove that he or she bets full-time to earn a livelihood, and not merely as a hobby. In addition to cash winnings, you must report as income any bonds, cars, houses, and other non-cash winnings at their fair-market value. If you win a state lottery prize that's payable in installments, you must include in your income both the annual payments and any interest amount on the unpaid installments. Finally, you must also keep accurate records that include the date and type of your specific wagering activity; the name and address or location of the gambling establishment; the names of other persons present with you at the establishment; and the amounts you won or lost. These tips are provided to give you general information about your taxes. If you have specific questions about gambling and lottery winnings, please consult a tax advisor or call the toll free number for Federal Tax Information and Assistance at 1-800-829-1040.
