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Question for the Money Doctors

Question submitted on Oct 3, 2013.

Question

i won 25000 playing a game online called gamehouse casino. its not an actual gambling game. it doesnt cost anything to play. no taxes were taken out of the check and i need to know how to claim it. can i use gambling debt against taxes i owe on it and approx how much will i owe?

Answer

Publication 525, Taxable and Nontaxable Income

A payer is required to issue you a Form W-2G (PDF), Certain Gambling Winnings, if you receive certain gambling winnings or if you have any gambling winnings subject to federal income tax withholding. All gambling winnings must be reported on your Form 1040 on line 21, other income, including winnings that are not subject to withholding. You may deduct gambling losses only if you itemize deductions. However, the amount of losses you deduct may not be more than the amount of gambling income reported on your return. Claim your gambling losses on Form 1040, Schedule A (PDF), as a miscellaneous itemized deduction that is not subject to the 2% limit. A nonresident alien of the United States cannot deduct gambling losses on Schedule A of Form 1040NR . It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. Refer to Publication 529, Miscellaneous Deductions, for more information.


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