What to do after a sizable win?

[jms62]

Originally Posted by Dunbar

That may be the rule for receiving a Form W-2G, but the IRS still wants you to pay tax on any gambling winnings. As I understand it, the sum of all your winning days at the track are taxable. And you can only deduct the losses of your losing days, or losses from other kinds of gambling, if you itemize. (or if you file a Sch C as a professional gambler).

How would IRS know about this win since it has no documentation?

[richard burch]

No accounting experience and could be totally wrong but.....If you did this wager online I would think it could be tracked by the deep state. I wonder if they would send you a W-2 if you needed to declare something. But aren't winnings offset by losses? Isn't that the reason for saving those losing tickets?

Not sure about fanduel either if you hit for a large sum on sports. all those wagers are there to see, cant hide it.

[Dunbar]

Originally Posted by jms62

How would IRS know about this win since it has no documentation?

I interpreted the initial question as asking what the IRS rule is, not whether they can figure out if you're reporting correctly.

[Dunbar]

Originally Posted by richard burch

... But aren't winnings offset by losses? Isn't that the reason for saving those losing tickets?...

You can't offset winnings with losses unless you itemize deductions on Sch A. For winnings at a gaming table or a slot machine, you're able to just report your "session" net win, and there has been a lot of discussion about what constitutes a "session". I think it's generally considered to be each time you cash out, but never longer than a day's gambling. I don't know what the "session" standard is for horse racing. If you do file a Sch A, then "saving those losing tickets" makes sense. It might also make sense if you can argue that a horse racing "session" is a day's bets.

You can also deduct losses (as well as expenses) if you're serious and continuous enough to declare your gambling a business and file a Sch C. However, that has its own set of issues. For example, if you file a Sch C you have to pay an additional "self-employment tax" on net profit for the year.

[caveat--I'm not a CPA. But I have filed a Sch C for gambling income for over 25 years with no major problems.]