Here are some important things to remember regarding your gambling winnings —
1. It’s taxable. All of it. Your gambling winnings could be from things like lotteries, raffles, horse races, and of course, from casinos. It includes cash and the fair market value of prizes like cars and trips. Report it on the “other income” line on your 1040.
2. The losses are NOT fully deductible. I know…bummer. You can only claim the losses up to the amount of your winnings. You can report your losses on Schedule A under “other miscellaneous deductions”. Don’t reduce your winnings by your losses, you need to report your winnings in full and your losses up to the amount of your winnings.
3. You may receive a W-2G for your winnings. If you win over a certain limit, then the payer is required to give you a W-2G. Check your W-2G to see if any tax was withheld and make sure you include that on your return.
4. KEEP GOOD RECORDS! Especially if you are going to claim some losses. You need to have receipts, tickets, or other documentation like a diary that records your losses and winnings. Take a look at Publication 529 for what type of info you should keep track of. Here is a link to a good video on record keeping as well.