Yes, you need to report your 1099-K for your gambling winnings. Although usually gambling winnings are reported on the form W-2G, you received a form 1099-K for your winnings because they were made electronically.
To report your gambling winnings on your tax return, complete the following steps in TurboTax:
- Open your return.
- Search for Other Income with the magnifying glass tool on the top of the page.
- Select the Jump to Other Income link in the search results.
- Select No to the question Did you get a 1099-MISC?
- Scroll down to Gambling Winnings under Less Common Income.
- Click Start next to Gambling Winnings.
- Choose Yes to the question Did you win money or prizes from gambling or lotteries during 2020?
- Choose I did not receive a W-2G.
- Follow the on-screen instructions to enter your data.
- After you enter your gambling or lottery winnings that weren't reported on W-2G, you can enter your Gambling Losses on the next screen.
You are able to deduct gambling losses up to the amount of your gambling winnings. In addition, your gambling losses will only be able to be deducted on Schedule A if you itemize your deductions, as opposed to taking the standard deduction. For more information, please see Can You Claim Gambling Losses on Your Taxes?
Thank you so much Lenah! One follow up question though. I put in my winnings, and then my losses which were equal, but I noticed that my 2020 refund dropped significantly. Does that sound right?
Your refund mostly likely decreased because you are taking the standard deduction on your tax return. Once you entered your gambling winnings, you had an increase in taxable income. However, since gambling losses are only deducted if you itemize on Schedule A, your input of losses will not change your tax calculation if you take the standard deduction.
TurboTax automatically selects the deduction (standard or itemized) that gives you the best outcome on your federal taxes. If the total of your itemized deductions are not greater than the standard deduction, it is better to take the standard deduction. Itemized deductions include items such as: mortgage interest, donations, state taxes, real estate taxes and medical expenses.
For more information on deductions, please see How does the Standard Deduction differ from itemizing deductions?