Can someone explain how taxes work for casino winnings? For example:
- Total winnings: $750,000
- Total bets: $550,000
This leaves a profit of $200,000 with lots of individual transactions. How would this be taxed?
You’ll need to separate your winning bets from losing bets to figure out total winnings and losses. All your winnings must be reported as income, but you can deduct losses as itemized deductions up to the amount of your winnings.
Tal said:
@Keir
So does that mean I wouldn’t be taxed on more than what I actually gained?
If you itemize deductions and have proof of your losses, then yes—for federal taxes. But remember, itemizing means you lose the standard deduction. Also, some states tax all winnings without letting you deduct losses.
@Keir
Actually, if your itemized deductions exceed the standard deduction, you’re better off itemizing. You can deduct losses up to your winnings without a cap. Make sure you or your tax preparer check every possible deduction to reduce your tax bill further.
@Tobin
True, but most people don’t have enough non-gambling deductions to make itemizing worth it. Losing the standard deduction could leave you with a higher taxable income overall. It’s a trade-off.
Keir said:
@Tobin
True, but most people don’t have enough non-gambling deductions to make itemizing worth it. Losing the standard deduction could leave you with a higher taxable income overall. It’s a trade-off.
That makes sense, especially with the current standard deduction rates. It can make a big difference depending on filing status and other deductions.
@Tobin
Exactly. If tax laws change in 2026, more people might itemize, but for now, many gamblers lose out on the standard deduction.
@Tobin
Proving losses can be tricky. If you have losing tickets or receipts, keep them. For example, big lottery winners sometimes store thousands of losing tickets as proof during audits.
@Keir
It’s wild. Imagine you win and lose small amounts daily, breaking even over the year, but still owe taxes because winnings count as income.
Dustin said:
@Keir
It’s wild. Imagine you win and lose small amounts daily, breaking even over the year, but still owe taxes because winnings count as income.
That’s how they discourage gambling without banning it outright. Many people don’t realize the tax impact until it’s too late.
@Zariah
Casinos should provide clearer tax info, but they won’t since it might scare off gamblers. Maybe the government should mandate it.
Keir said:
@Zariah
Casinos should provide clearer tax info, but they won’t since it might scare off gamblers. Maybe the government should mandate it.
True, but serious gamblers and professionals already know these rules. Casual players might benefit most from better disclosures.
Dustin said:
@Keir
It’s wild. Imagine you win and lose small amounts daily, breaking even over the year, but still owe taxes because winnings count as income.
The tax code incentivizes and discourages certain behaviors. Gambling gets treated harshly to dissuade it, but it mainly affects high rollers who gamble tens of thousands annually.
Dustin said:
@Keir
It’s wild. Imagine you win and lose small amounts daily, breaking even over the year, but still owe taxes because winnings count as income.
If you use winnings to gamble more, how is that different from earning $50 and spending it on something else?
Dustin said:
@Sawyer
Investments are taxed only on profits. Gambling should work the same way, but it doesn’t.
Investments have a cost basis. Gambling doesn’t, apart from the wager itself.
Winnings count as ordinary income, and losses are itemized deductions.
Vern said:
Winnings count as ordinary income, and losses are itemized deductions.
Losses are only deductible up to the amount of winnings.