Yes, you can deduct gambling losses or lottery losses up to your gambling winnings as long as you itemize your deductions on Schedule A. (You Itemize if you have deductions like mortgage interest, real estate taxes, charity, medical expenses, etc). You will not be able to claim your losses if your Standard Deduction is higher than your itemized deduction. Dont worry, TurboTax will ask you the right questions to make sure you get the highest deduction.
You will have to report all the money you win as taxable income on your return. However, the deduction for your losses is only available if you are eligible to itemize your deductions. Gambling losses go on Schedule A line 28 and are not subject to the 2% threshold.
The easiest way to get to the W-2G screen is to search for "gambling losses" in your TurboTax program.
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