Here’s another tax question we’ve received recently, with the caveat that we are not accountants and we encourage players to consult with an accountant with gambling law familiarity:
Can you write your winnings and losses off on your federal taxes, mostly losses of course?
Paul F.
There is a mechanism for being able to claim gambling losses on your federal U.S. tax return. However, not all tax filers are eligible for this, and state taxes are not covered here because those scenarios are a lot more diverse. (As such, we always advise consulting an accountant versed in these issues, as each person’s situation will be different.)
With that in mind, here are things that you should know.
You Must Be Itemizing Deductions
Many tax filers in the United States rely on the standard deduction – it’s a deduction that’s granted automatically for a certain amount, which increases along with the rate of inflation each year, and also was increased substantially a few years ago with tax law changes passed by Congress.
To be eligible to itemize, you would effectively need to submit more deductions than the amount of the standard deduction. If your various deductions get you there, you’re able to incorporate gambling losses into your itemized deductions. Otherwise it’s considered covered by that standard deduction.
If you itemize, losses can be deducted up to the total amount of winnings reported (starting with the 2026 tax year, only 90% of your losses can be deducted against winnings). If you won $10k and lost $20k, you can only deduct $10k since that’s the total amount that you won. If you won $10k and lost $5k, you can deduct the eligible losses as a deduction against your winnings (100% for the 2025 tax year, or $5k; 90% for 2026 and beyond, or $4,500).
You Must Be Reporting ALL Wins and Losses
Many players get tripped up by the fact that you have to report all your winnings and all your losses to do this, not just what’s been reported to the IRS on jackpot forms. If you are not doing this, you are leaving yourself open to trouble in the case of an audit.
What does this mean? Each time you win on a session, you report that winnings as income. Each time you lose on a session, you can deduct those losses against your winnings as income.
The effect of this is it drives your overall income up, but then you’re able to claim back losses up to the winnings in that income.
You Must Keep Diligent Records
We’ve seen plenty of players advise others to just grab win/loss records off the casino websites. But the IRS advises this isn’t good enough for proof, and advises gambling diaries, receipts from ATMs, tickets and other such record-keeping proof to truly prove your gambling activity. Depending on the type of game you’re playing, they have recommendations for what you should be recording.
Why are win/loss records not enough? Because if you forget to put in your card, the card reader doesn’t work, you leave your card behind by accident and someone else then gambles with it in the machine… it’s far from a foolproof system.
If you don’t do this, and get audited, it’s another issue you’ll have to contend with, and they may not accept the deductions if you can’t adequately prove your play.
Takeaway
So, gambling losses can be written off if you qualify, but there’s additional steps to take to ensure you’ll be fine if the IRS decides to audit you. Hopefully this helps all of those wondering what is possible in terms of gambling deductions.
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Good article. I learned the hard way about record keeping. I won over $45,000.00 playing bingo and additional $30,000.00 from the slot games, and claimed wins/loses and my tax return. My return was audited that year and the records I had were complete, but were not enough. The IRS agent said exactly what you said, keep a diary or journal of your playing, spending, winning etc. Fortunately, I only had to pay an additional $1,500.00 in taxes, which considering, wasn’t much. Now, every trip, everything is documented. Just in case. Thanks for the insight, enjoy reading your articles. Keep up the good work.
We’re sorry you had to go through that experience, Elizabeth, but appreciate you sharing your experience, and we hope others learn from what you shared as well!
As a CPA, I get nervous and cringe when I see bad advice circulating through social media posts. I clicked on this to see how this information was presented and WOW, you are spot on. I honestly haven’t seen any tax information written this well and easy to understood for the non CPA types. Well done BC & staff!!
We’re with you on the advice, which is why we did this post and aimed to keep it as simple as possible. We’ve seen the types of posts you mention and wanted to have something more helpful.
Can you use withdraws shown from your bank for online gambling?
The online sites themselves have very accurate recordkeeping because they don’t need a card to track your bets and wins. Therefore their reporting will be pretty helpful, and your bank withdrawals/deposits can back up that data for more robust documentation.
If you win a hand pay is it better to take it as cash or a check? TIA
Hi Annette – There’s no better or worse in general – we just recommend doing what makes the most sense for you. Some player like a check as they know they’re going home with the money, but there’s no “best” option here.
If you win a jackpot but spend all or most of it, is your winnings for the session the net win or do you have to report the whole amount on the w2g on your tax report?
A jackpot is based on a single wager, so paperwork by the casino to the IRS will be filed for the entirety of the win based on that wager, not the whole session.If you qualify to deduct losses against your wins, that’s when other wagers can factor in to your taxes at the time you file. But the jackpot will be filed as won.
The $1,200 figure was set in the 70’s. Inflation adjustments should of been agreed upon at that time they instituted the taxation. Our Legislators need to adjust the tax code. 2024 figure should be $2,400. Anyone else agree?
The IRS even seems to agree this time, but the problem has been there has not been enough support for changes to go through in previous attempts, so we’ll have to see if this one is successful.
While back they had started to talk about changing to around $5,000. Not sure where that bill stands at this point but it definitely needs adjusted. Last year IRS hit me with 4500 tax bill from 4years prior over 3 handpays I didn’t get taxes taken out. 2/10yrs I’ve actually won for the year and it wasn’t by that much considering losing years were 10-20x that amount.
Both congressional proposals and an IRS rule change have been proposed in recent years, but neither got very far off the starting block. It continues to be an elusive ask.
get you state & federal taxes taken out of yor win, if applicablein your state. I do 22 or 28% depending. it’ll shown on that w2-g
This is our general recommendation too, Kathy – it’s generally always a better outcome to get refunded money vs. having a surprise payment due at the end of the year.