Imagine this: you’ve made it to the final showcase of a popular game show – and the grand prize is the largest lump sum of cash in TV history. Suddenly, the host announces that you have just nabbed the top spot!
Thousands of people win big on game shows every year. The chance of hitting the jackpot is part of the thrill and excitement of game shows, but keep in mind you do need to report any prize winnings on your taxes. But it doesn’t have to be overwhelming! TurboTax makes it easy to report any prize winnings or gambling jackpots.
So, what qualifies as taxable prizes? The IRS has created the following seven facts you need to know about winnings:
- Gambling income includes – but is not limited to – winnings from lotteries, raffles, horse and dog races, and casinos, as well as the fair market value of prizes such as cars, houses, trips, or other non-cash prizes. (Like all-inclusive paid trips!)
- Depending on the type and amount of your winnings, the payer might provide you with a Form W-2G and may have withheld federal income taxes from the payment.
- The full amount of your gambling winnings for the year must be reported on line 21 of IRS Form 1040. You may not use Form 1040A or 1040EZ – but no need to worry; TurboTax will handle this for you.
- If you itemize deductions, you can deduct your gambling losses for the year. Keep in mind that you cannot deduct gambling losses that are more than your winnings.
- It is important to keep an accurate diary or similar record of your gambling winnings and losses. If you deduct your losses, you should be able to provide receipts, tickets, statements, or other records that show the amount of both your winnings and losses if you need to provide substantiation.
Whether you’re racking up the dough at Vegas slot machines or winning for than a million dollars on a reality series, TurboTax allows you to easily file your winnings.
Don’t worry about knowing these tax rules. Meet with a TurboTax Full Service expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Live Full Service today, in English or Spanish, and get your taxes done and off your mind.
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