Have a small amount of gambling (online sports betting) winnings to report as other income (no W2G). How are winnings and losses defined?

[lindsey-320]

E.g. if I place two wagers, one $100 wager that wins $200 (net $100 won), and a second $50 wager that loses (net $50 lost).  In total in this example I won $50. Is that $50 of winnings, or $100 in winnings (other income) with $50 in losses (itemized deduction)?  Or for the first bet, would you break it down further into "$200 of winnings" and $100 of losses (the wager)?  The instructions are not clear on the form how winnings and losses are defined and whether you treat each bet, or day, etc. separately or combine.

[MaryK4]

No, unfortunately, you enter the amount of your winnings and do not deduct the amount you paid for the wager off the top.  You then must enter your losses, which are an itemized deduction.  The amount of gambling losses you can deduct can never exceed the winnings you report as income. 

See How to Pay Taxes on Gambling Winnings.

[lindsey-320]

Thanks, I understand I can then enter losses as an itemized deduction.  I am still confused as to what winnings and losses are in the above example, though.  For the above two (sample) bets, are the winnings to report as income $200 and the losses to report on itemized deductions $150, or something else?  Also, how are "bonuses" from online sports betting companies treated?  Are these winnings?  (For example, give you $50 for signing up, or give you "risk free bets" where after the bet they give you a bonus of the amount of your wager.  Are these winnings?)

[lindsey-320]

Also, I am interpreting your response as the wager is recognized as a "loss" regardless of whether you won or lost the bet?

[JohnB5677]

@MaryK4 stated it correctly.  You must take the winnings as income from a W-2G.  The wagers can be deducted up to the amount of your winnings.

However, this is posted to your Itemized Deductions, and it only counts if you qualify to use the Itemized Deductions. 

You will get $12,400 for a Standard deduction if you're single, and  $24,800 if married

You would have to exceed that amount in Mortgage interest, Property Taxes, Medical expenses and Charitable giving and Gambling losses to make it worthwhile to post your Itemized Tax Deductions.

[lindsey-320]

Yes, I already have to itemize my deductions every year so that is no problem. (State local taxes capped @10k + charitable giving puts me well above the standard deduction for me)

Can you point me to where/which form instructions define wagers as losses, out of curiosity?  Or is this just the common interpretation?  Just because I was having trouble finding it and it wasn't obvious to me. 

Also, would you interpret bonuses from sports gambling websites (first bet bonus,  sign up bonus,  "risk free bet" where wager is refunded) as winnings?

[gloriah5200]

Per IRS.gov

Other Itemized Deductions

List the type and amount of each expense from the following list next to line 16 and enter the total of these expenses on line 16. If you are filing a paper return and you can't fit all your expenses on the dotted lines next to line 16, attach a statement instead showing the type and amount of each expense.

.Only the expenses listed next can be deducted on line 16. For more information about each of these expenses, see Pub. 529..

• Gambling losses (gambling losses include, but aren't limited to, the cost of non-winning bingo, lottery, and raffle tickets), but only to the extent of gambling winnings reported on Schedule 1 (Form 1040), line 8.

For additional information, please refer to:

IRS deduction for gambling losses

[lindsey-320]

Thanks.  I guess it is just not obvious to me from this

"Gambling losses (gambling losses include, but aren't limited to, the cost of non-winning bingo, lottery, and raffle tickets)"

that a winning gambling wager should be defined as a gambling loss.  If I walk out of a casino having netted $100 that sounds like $100 of winnings to me.

I guess I'll trust the consensus here though.  Really, I wish the online sports betting sites were required to send you a W2G even for small winnings, just because it would make the filing process easier than adding up dozens of separate $5 wagers and winnings in my records and trying to separate out what was what, when I know exactly what my net profit was.

[lindsey-320]

Hi again,

I'm filling out my Schedule A and reading more carefully, and I now see that gambling losses are defined "gambling losses include, but aren't limited to, the cost of non-winning bingo, lottery, and raffle tickets"

But everyone here was saying that winning wagers still had to go in the deduction.  Just double checking this - Why is the interpretation that the wager, for winning bets, can't be netted out of the winnings, and instead needs to be itemized separately?  From the Schedule A instructions I'm only reading that non-winning bets go into losses.

My taxes are exactly the same either way because I itemize, but it seems like this could be important for those who do not.

[MaryM428]

Winnings and losses are entered separately to be sure that the losses do not exceed the amount of winnings.

Can I deduct gambling losses?

@lindsey-320

[emarkulics]

I am super confused on this and can't seem to get a straight answer anywhere (even tried calling the "tax experts" and they told me they don't know).  Are "winnings" supposed to be all money you won, or just the money you withdrew? And is "losses" all wagers, or just the money you deposited? My numbers come out very different depending on what I input, because online casinos give out a lot of bonuses which affect your totals. So my withdrawls/deposits profit is almost double my total winnings/losses profit. If someone is gambling at an in-person casino would they be claiming every single wager they make (e.g. pressing the penny slots button 1,000 times a night) or do they just report "I went in with $20 and left with $100"? 

[LeonardS]

Gambling winnings are what you walk away with. 

For example, if you start the day with $1000 and at the end of the day, you have $1500 your winnings are $500 and you have no gambling losses. 

If you start the day with $1000 and end up with $500 remaining from your initial $1000 for have a gambling loss of $500 and no winnings.