How to Report Gambling Winnings Without a W-2G

All gambling winnings are taxable income and must be reported on your federal tax return, even if you do not receive a Form W-2G from the payer. While many smaller wins fall below automatic reporting thresholds, they are not exempt from taxation, and the responsibility to track and report this income is yours.

This guide explains how to calculate your total winnings, report the income on the correct tax forms, and maintain the necessary documentation. Following these procedures helps ensure all income is accounted for, preventing potential back taxes or penalties.

Calculating Your Reportable Gambling Income

To prepare your taxes, you must first determine your total gambling winnings for the year. A common mistake is to report a net amount after subtracting losses. The IRS requires you to report your gross winnings as income and deduct any losses separately, meaning you must calculate the total of all your wins and the total of all your losses.

The IRS uses the concept of a “gambling session” to calculate these figures. A session is a continuous period of play on a single type of game at one location. For example, playing slot machines at a casino from 2:00 PM to 5:00 PM is one session. A new session begins if you take a long break or switch to a different game, such as moving from slots to a poker table.

The outcome of a session is calculated by subtracting the amount you wagered from the amount you won. If you start a slot machine session with $200 and end with $500, you have a session win of $300. If you start with $200 and end with $50, you have a session loss of $150. You must track the outcome of every session.

To find your reportable income, add together all of your winning sessions. For example, if you had winning sessions of $300, $150, and $500, your total gross winnings to report as income is $950. You must also add up all your losing sessions separately to determine your total losses, which may be deductible.

How to Report on Your Federal Tax Return

After calculating your total gross winnings, you must report this figure on your tax return. This income is entered on the “Other income” line of Schedule 1 (Form 1040), Additional Income and Adjustments to Income.

Gambling losses are handled separately and are only deductible if you itemize your deductions instead of taking the standard deduction. If you itemize, you report your total gambling losses for the year on the “Other Itemized Deductions” line of Schedule A (Form 1040).

You cannot deduct more in losses than the amount of gambling income you reported. For instance, if you reported $2,000 in winnings, you can only deduct up to $2,000 in losses, even if your actual losses were higher. If your losses were $3,000, the remaining $1,000 cannot be deducted or carried forward to future years. If your losses were $1,500, you would deduct the full $1,500.

If you do not itemize, you cannot deduct any gambling losses, and your entire gross winnings will be taxed. You should compare your total itemized deductions against the standard deduction for your filing status and choose the option that results in a lower tax liability.

Required Record-Keeping for Winnings and Losses

Without a Form W-2G, the burden of proof for your gambling winnings and losses is on you. The IRS requires detailed records to substantiate the amounts on your tax return. Without proper documentation, the IRS may disallow claimed losses during an audit, resulting in a higher tax bill plus interest and penalties.

The best way to meet this requirement is to keep a gambling diary or log. For each session, your log should include:

• The date of the activity
• The specific type of gambling (e.g., slot machines, blackjack, sports betting)
• The name and address of the gambling establishment
• The names of anyone who was with you
• The amounts you won or lost during that session

In addition to a log, you should retain other evidence to support your entries. Supporting documents can include:

• Wagering tickets
• Payment slips from the casino cage
• ATM receipts from the gambling establishment
• Bank or credit card statements showing casino transactions

For electronically tracked play with a player’s card, the casino’s annual win/loss statement is also valuable documentation, but it should be supplemented by your personal records.