Have you always wanted to be a contestant on the Wheel of Fortune? Aside from the unlimited bragging rights you’ll earn from smoking your competition, you’re probably more interested in winning free money, cars and prizes. Before you send in your audition tape, consider doing further research. It turns out that even if you win the grand prize, Uncle Sam is the ultimate champion.
Whether you win on a game show, scratch off ticket, or raffle
; your prize is taxable. This includes cash and non-cash prizes such as trips and appliances. Non-cash prizes must be reported at fair market value on your tax return. Depending on your prize amount and type of bet placed, you’ll receive a Form W-2G, Certain Gambling Winnings and a copy will be sent to the IRS.
Prizes that require a W2-G are:
• Winning $1,200 or more from Bingo or the slot machine
• Winning $1,500 or more (minus your wager) playing Keno
• Winning $5,000 or more (minus your wager or buy in) from a poker tournament
• Winning more than $600 or at least 300 times the wager from another gambling source
• Anything that has federal taxes withheld
Even if you don’t receive a W2-G, you’re still responsible for reporting your gambling income. Keep track of your wins and losses by holding on to any receipts, tickets or statements you receive.
When you file with ezTaxReturn, we make reporting your winnings easy. Just answer a few questions in the “Other Income” section of the program and you’re done. If Lady luck hasn’t been on your side, report your losses under “Itemized Deductions”. Your reported losses cannot be greater than your winnings. So, if you won $5,000 but lost $15,000, you’ll only be able to claim up to $5,000 in losses on your return.