Gambling and Prize Winnings

Today's tax question comes from S. Hardage in Texas. She asks:

"If you win money through a drawing in the thousands, do you just pay taxes on that when you file your regular tax return and claim it as other income?"

That's right. Prizes, gambling winnings, lotteries, and awards you receive are taxable income. You report this as other income on Line 21 of Form 1040. Gamblers can deduct gambling losses, but only as an itemized deduction and only up to the amount of winnings.

For more information, see:

• Prizes and awards (from IRS Publication 525)
• Gambling Income and Expenses (IRS Tax Topic 419)

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