You Won the Lottery, Avoid Paying Taxes

Tax Act

You Won the Lottery, Avoid Paying Taxes

The IRS has come out with a list of helpful tax tips about your lottery and gambling winnings. Although all gambling winnings are taxable, you can avoid paying taxes on your winnings if you can document gambling losses of the same amount.

Winnings from lotteries, raffles, races, and casinos including prize items are all taxable, that is the bad news. Sometimes the establishment with which you won the wager will automatically deduct taxes and provide you with a W-2G to file with your taxes. Report all your winnings for the year on line 21 of the 1040. Filing the 1040 long form is required when you have gambling winnings.

File a Schedule A also, where you itemize the losses you have also had. Keep documents from the events with which you lost money and total the amounts wagered on line 28 of the form. You can make all your winnings tax free if you have enough losses to offset them. None-the-less you can reduce the tax expense with the losses you do have.

Check the Status of Your Tax Return Now!