Everything You Need to Know About Filing Taxes on Winnings

Like all other taxable income, the IRS requires you to report prizes and winnings on your tax return, too. That means you might have to pay taxes on those winnings. Your winnings end up being included in your taxable income, which is used to calculate the tax you owe. But before you report your prize and gambling income, you need to know what does and doesn’t count as income.

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Gambling and lottery winnings and losses

Whether you play the lottery, slots, blackjack, roulette or another game considered gambling, you must report all of your winnings even if you end up losing money overall.

The IRS states that you’re supposed to keep a diary or similar record that details your winnings and losses, which includes information such as:

  • The dates and types of specific wagers.
  • The amount you won or lost.
  • The address of the gambling establishment.
  • The names of other people present with you at the gambling establishment.

You should also keep other documentation that demonstrates your gambling activities such as,

  • bank withdrawals,
  • losing lottery tickets or
  • payment slips from the gambling establishment.

Depending on the size of your win, you may receive a Form W-2G, Certain Gambling Winnings and may have federal income taxes withheld from your prize by the gambling establishment.

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