Even if your gambling losses were greater than your winnings, you would still have to report them separately on a tax return. The IRS and the State of New Jersey do know about your gambling losses, but they do get a copy of your gambling winnings on Form W-2G. Therefore, your losses must be reported in order to offset your gains.
Per New Jersey, gambling winnings from a New Jersey location are taxable to nonresidents. You may use your gambling losses to offset gambling winnings from the same year as long as they do not exceed your total winnings. You must claim zero income for net gambling winnings.
Lastly, you may be required to substantiate gambling losses used to offset winnings reported on your New Jersey tax return. Evidence of losses can include your losing tickets, a daily log or journal of wins and losses, canceled checks, notes, etc.
Lottery and Gambling Winnings
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