Gamblers Must Pay Taxes on Winnings | Tax Tip of the Week | No. 176

Don't Bet On It!

With the growing number of Ohio casinos, we wanted to remind you that the IRS will be looking at your winnings!  The IRS (and the State of Ohio and cities too) considers gambling proceeds as taxable income. Gambling income includes winnings from lotteries, raffles, horse races and casinos. The payer of gambling winnings must issue 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) from a poker tournament;-$600 or more in gambling winnings (except for those games stated above) and the payout is at least 300 times the amount of the wager.   Gambling income is reported as “Other Income” on the first page of your federal income tax return.  If you itemize your deductions, you can deduct your gambling losses on Schedule A.  You need to keep good documentation throughout the year to substantiate your gambling losses.  You can only claim a gambling loss deduction up to the amount of the gambling proceeds. While it is good news that you may be able to deduct gambling losses on the federal return, there is no place to deduct losses on your Ohio (or School District) tax return.  As we said, gambling winnings are reported on the front page of the federal return. It is the last number on the front page of the federal return that goes to Line 1 and begins your Ohio return.  In addition, more and more Ohio municipalities are now defining gambling proceeds as taxable income.  Again, there is no place to deduct gambling losses on a city tax return.Good luck as you try out the new casinos—just don’t bet on keeping it all! 

As always, give us a call with any questions you may have.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.

Rick Prewitt - the guy behind TTW...until next week.