Raking in Tax Breaks from Gambling - Losses are deductible against winnings

Do you like to gamble for entertainment? If the answer is “yes,” it is important to understand all the tax rules related to gambling wins and losses. Otherwise, you may end up paying considerably more taxes than necessary.

Basic Premise: Gambling winnings constitute taxable income on the federal level. It does not matter how and where you win. It could be at a church raffle or the racetrack or a casino aboard a cruise ship. In any case, you owe tax to Uncle Sam on the income. Depending on the type and amount of your winnings, the payer may provide you with a Form W-2G and may withhold federal income tax from the payment.