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Tax Forms And Lottery (Gambling)!

Topic closed. 16 replies. Last post 8 years ago by four4me.

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Eden Prairie, MN
United States
Member #49875
February 18, 2007
63 Posts
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Posted: January 24, 2009, 8:49 pm - IP Logged

I know that there is something with gambling and tax forms,that I want to learn more about.  I don't know if pointing out that I am just 19 years old is an excuse or not for not knowing much about filing tax for the governments,but I do want to learn and I bet you guys know more about this situation than me,so please help me out.  By the way,I kept all of my tickets except for one since I won,but I didn't know that I could ask for a receipt for the winning and I didn't scan the winning ticket,so I learn from my mistake.

I spent $31 so far this year from the POWERBALL drawings,but I won $15 from one of them! Well,I don't really get what the following means: [You maydeduct gambling losses only if you itemize deductions. Claim yourgambling losses as a miscellaneous deduction on Form 1040, Schedule A(PDF). However, the amount of losses you deduct may not be more thanthe amount of gambling income you have reported on your return.]

1.So,I can only deduct no more than $15?
2.Is there a point to list your gambling losses?  You pay less tax as a result from losing,lol?

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    NY
    United States
    Member #23835
    October 16, 2005
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    Posted: January 25, 2009, 2:52 am - IP Logged

    The reason that so many people make a good living preparing taxes is that most people 2 or 3 times your age don't know nost of the details.

    If you win enough, you'll get a form W-2G along with the money. "Enough" means $600 or more. Your winnings will get listed on your 1040. You can only deduct losses up to the amount you won, and only if you itemize your deductions.  At 19, with modest winings I'd guess you have no reason to itemize. In your example, you've got $15 in taxable winnings, and you could therefore deduct $15 of the $31 you spent. Yes, there's a point to listing the losses. If you didn't, 100% of your winnings would be taxable, instead of just your profits. If you were to win $1000 and you had spent $1000, you'd break even, unless you declared the winninsg without deducting the losses.

    One of the things that many people are confused about (including people here, and you may well see a post claiming I'm wrong) is the taxes on winnings. All winnings* are taxable income. You'll only get the W-2G form, and the IRS will only be notified if you win $600 or more, but even a $15 proze is taxable. The IS not knowing you had income may mean they won't notice if you don't declare it, but it doesn't mean they can't hit you with penalties and interest if they find out.  As a practical matter I doubt they'd care about the $15 even if you got audited and let it slip. OTOH, once in a while somebody wins $5000 by playing the same pick 3 number on 10 different tickets. Having 10 separate $500 winners means there are no forms, but if the IRS were to find out you had won that much and didn't declare it, you could potentially be very unhappy with the results.

    *I'm only talking about federal taxes. Several states exempt winnings in their own lotteries. For example, if you won PB with a PA ticket, PA wouldn't tax the winnings. Your state of residence, if it wasn't PA, would, assuming they have a state income tax.

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      Eden Prairie, MN
      United States
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      February 18, 2007
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      Posted: January 25, 2009, 8:26 am - IP Logged

      Update:Spent $41 USD,but won $15 USD!

      Noob Questions:1.What is itemize?

       

      2.What is the whole point of deducting $15 of the $41 I spent?  Where do I write $15 and $41 on the 1040?

       

      3.Is it a problem that I forgot to ask for a receipt of my winning?  Or will the IRS trust me?

       

      4.If I can only deduct up to $15,is it advisable to mail a copy of all of my losing tickets even it all sum up to more than $15?

       

      5.Is it a program that I can buy that will help me to increase my knowledge about tax forms?  Like an interactive program where if I put the wrong information down,it will tell me to try again or something?

        Litebets27's avatar - power
        Maryland
        United States
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        January 14, 2005
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        Posted: January 25, 2009, 9:51 am - IP Logged

        Update:Spent $41 USD,but won $15 USD!

        Noob Questions:1.What is itemize?

         

        2.What is the whole point of deducting $15 of the $41 I spent?  Where do I write $15 and $41 on the 1040?

         

        3.Is it a problem that I forgot to ask for a receipt of my winning?  Or will the IRS trust me?

         

        4.If I can only deduct up to $15,is it advisable to mail a copy of all of my losing tickets even it all sum up to more than $15?

         

        5.Is it a program that I can buy that will help me to increase my knowledge about tax forms?  Like an interactive program where if I put the wrong information down,it will tell me to try again or something?

        Ky Floyd is absolutely correct.

        I would suggest that you head for the library or bookstore and pick up a copy of "Taxes for Idoits" or " Taxes for Dummies" these will walk you through the taxes step by step and interpret the tax lingo into laymen's terms.

        Your winnings are not enough to generate a W-2G form to claim on your taxes.

        Good luck on your quest to win and file taxes.

        Feeling,  PRICELESS!!!Banana

        Come on Jackpot!!!

          MysteryMan424's avatar - batman22
          Pelham NY
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          April 16, 2008
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          Posted: January 25, 2009, 10:18 am - IP Logged

          Update:Spent $41 USD,but won $15 USD!

          Noob Questions:1.What is itemize?

           

          2.What is the whole point of deducting $15 of the $41 I spent?  Where do I write $15 and $41 on the 1040?

           

          3.Is it a problem that I forgot to ask for a receipt of my winning?  Or will the IRS trust me?

           

          4.If I can only deduct up to $15,is it advisable to mail a copy of all of my losing tickets even it all sum up to more than $15?

           

          5.Is it a program that I can buy that will help me to increase my knowledge about tax forms?  Like an interactive program where if I put the wrong information down,it will tell me to try again or something?

          Depending on what you do for a living itemizing is deducting from your tax liability monies that you use to perform your duties. Example a union laborer can claim union dues, tools, supplies laundry cost, trade magazines etc. Since the IRS deducts the tax from your paycheck, itemizing is how you recover compensation from additional expenditures. Let's say on that little box on the tax form where it says occupation you put Professional Gambler. There are certain requirements that you will need to follow. You will be allowed to itemize paper, pens, travel, food etc. Maintain receipts for everything and when it comes to the gambling receipts ( tickets, WG2 forms) you must maintain a log containing information about how much was bet where the ticket was purchased and a record of winnings. There is a book called Lottery Players Tax Log that should help you.

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            Eden Prairie, MN
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            Posted: January 25, 2009, 11:37 am - IP Logged

            So,what about if I list $15 as my winning,but since I forgot to ask for a receipt or photocopy the winning ticket,then how can I provide proof then?

              JAP69's avatar - alas
              South Carolina
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              November 4, 2001
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              Posted: January 25, 2009, 12:14 pm - IP Logged

              We just had a new secretary of the treasury appointed who did not understand the tax code either.

              Green laughGreen laugh

              MAGA

                four4me's avatar - gate1
                MD
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                Posted: January 25, 2009, 1:42 pm - IP Logged

                What part of you don't have to claim winnings under $600.00 don't you get.

                Big John says. You don't hit the number. The number hits you!!!!

                               I'm not Big John, I'm Four4me, Big John's a friend.
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                  Eden Prairie, MN
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                  Posted: January 25, 2009, 4:37 pm - IP Logged

                  What part of you don't have to claim winnings under $600.00 don't you get.

                  Oh,the previous poster didn't say that I don't have to claim winnings under $600.00,to me it meant that if my winnings were under $600.00,then I put it on a 1040 form.

                   

                  I would do that,only if it would benefit me or I would forget it.

                    four4me's avatar - gate1
                    MD
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                    June 18, 2003
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                    Posted: January 25, 2009, 5:57 pm - IP Logged

                    Oh,the previous poster didn't say that I don't have to claim winnings under $600.00,to me it meant that if my winnings were under $600.00,then I put it on a 1040 form.

                     

                    I would do that,only if it would benefit me or I would forget it.

                    Taxes can be tricky depending on many factors itemizing deductions usually means a person who has a good steady hight earning job one that might require out of pocket expenses for doing that job be it tools, clothing, transportation etc. Also owning a house and paying taxes there deductible. Medical expenses and a few other things might be claimed on tax forms.
                     
                    Many people fill out the short form for taxes. Married people usually fill out long form or itemized deduction forms.
                     
                    If you win more than 600 dollars gambling you can claim any loses you might incur should you continue playing the lottery after your win. Keep all receipts and losing tickets until tax time and your tax man/woman will tell you to hold onto those tickets and receipts in the event you get audited.  
                     
                    The IRS web site has all the information one needs concerning taxes on gambling winnings.

                    Big John says. You don't hit the number. The number hits you!!!!

                                   I'm not Big John, I'm Four4me, Big John's a friend.
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                      Posted: January 25, 2009, 8:57 pm - IP Logged

                      What if you claimed a prize under 600 through the lottery (recieving a check in the mail) because you were out of state? Is it best to declare, or does the lottery not mention to the IRS any prize under 600? This being an alternative to just recieving cash.

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                        NY
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                        Posted: January 27, 2009, 1:47 am - IP Logged

                        What part of you don't have to claim winnings under $600.00 don't you get.

                        Which part of    gambling   winnings    are     taxable     don't you understand? You've clearly got an internet connection, and that and a room temperature IQ makes it incredibly easy to get the info directly from the IRS. If you can't be bothered to educate yourself, perhaps you could at least stop misinforming others.

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                          NY
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                          Posted: January 27, 2009, 1:49 am - IP Logged

                          So,what about if I list $15 as my winning,but since I forgot to ask for a receipt or photocopy the winning ticket,then how can I provide proof then?

                          You're afraid that if you tell the IRS you earned money and don't have proof they won't accept the taxes you try to pay?

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                            NY
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                            Posted: January 27, 2009, 1:58 am - IP Logged

                            What if you claimed a prize under 600 through the lottery (recieving a check in the mail) because you were out of state? Is it best to declare, or does the lottery not mention to the IRS any prize under 600? This being an alternative to just recieving cash.

                            Just because they're required to report winnings of $600 or more to the IRS doesn't guarantee that they can't report winninsg of less than $600. I seriously doubt that they would bother, and I don't think the IRS would want the potential flood of reports, but it may be possible. In your case, whether the IRS is told or not, there's a very clear paper trail proving that you won. If you should happen to get audited, it's possible, if unlikely, that the IRS could become aware of the check.

                            I'm assuming the reporting threshold has some basis in a balance between how much people win vs how much they lose. Even if the average person doesn't bet, and lose $600 per year, very few people turn a profit over a period of a few years unless they win aprize that's big enough to be reported. I would guess that the IRS is perfectly willing to believe that most people who win $500 will be able to offset that much with ther losses over a year or two. In your case, it would probably be  simple enough to declare the winninsg and declare deductions of the same amount.

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                              Kentucky
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                              Posted: January 27, 2009, 6:13 pm - IP Logged

                              What if you claimed a prize under 600 through the lottery (recieving a check in the mail) because you were out of state? Is it best to declare, or does the lottery not mention to the IRS any prize under 600? This being an alternative to just recieving cash.

                              Prizes under $600 are usually cashed at any state lottery retailer and usually no ID is necessary so reporting the winnings to the IRS is up to the individual. W-2G forms are issued with prizes over $600, the IRS has the record and will send you a bill if the winnings weren't reported on the 1040 form. Up to the amount of the winnings can be deducted but you must use itemized deductions.

                              Not many people would report $15 in winnings knowing they spent $30 to win it and probably why the tax codes have the $600 limit.