This guide covers U.S. federal reporting only, so dollar figures are in US dollars. Line numbers can change between tax years, and the 2026 forms are still in draft. Check every line against the final IRS instructions for your year before you file.
Key Takeaways
- Losses go on Schedule A, not the Form 1040 income section, and only if you itemise.
- Report all winnings, with or without a Form W-2G.
- Deductible losses are capped at winnings, and at 90% of losses from tax year 2026.
- Without reliable records, the deduction can be denied.
Where Do Gambling Losses Go on Form 1040?
The direct answer: Schedule A
For tax years 2024 and 2025, recreational gambling losses go on Schedule A, line 16 ("Other Itemized Deductions"). The total then feeds into your itemised deductions on Form 1040. The draft 2026 Schedule A moves them to a dedicated line 17a, "Deductible gambling losses." That is a draft position, not a confirmed final line.
Winnings are reported separately
Winnings go on Schedule 1, line 8b ("Gambling") for 2024 and 2025. They flow through Schedule 1, line 10 to Form 1040, line 8. The draft 2026 Schedule 1 keeps line 8b.
Do not net them first
Publication 529 says you cannot subtract annual losses from winnings and report only the difference. Report the full winnings, then claim permitted losses on Schedule A.
Only if you itemise
You claim the deduction only by itemising. Compare your total itemised deductions, including gambling losses, against the standard deduction:
| Filing status | 2025 | 2026 |
|---|---|---|
| Single or married filing separately | $15,750 | $16,100 |
| Married filing jointly | $31,500 | $32,200 |
| Head of household | $23,625 | $24,150 |
These are basic amounts, before any age or blindness additions. If the standard deduction is larger, the gambling-loss deduction gives you nothing.
No refund, no carryforward
The deduction reduces taxable income. It is not a reimbursement from a casino, sportsbook or the IRS. Section 165(d) limits losses to gains in the same tax year, so unused losses do not carry forward.
How to Report Gambling Winnings and Losses Step by Step
- Gather your records. Collect Forms W-2G, casino and sportsbook statements, online account histories, tickets, bank and payment-app records, and your gambling log. A W-2G rarely captures everything.
- Total all winnings. Include casino games, poker, sports betting, lotteries, raffles and racing. Noncash prizes such as cars and trips count at fair market value.
- Enter winnings on Schedule 1. Use line 8b for 2024 and 2025, and confirm the amount reaches Form 1040, line 8.
- Treat withholding as a credit. Tax withheld and shown on a W-2G is a payment against your tax. It does not replace reporting the income.
- Work out allowable losses. Compare documented losses with reported winnings and apply the limit for your tax year.
- Enter the amount on Schedule A. Then compare total itemized deductions with the standard deduction.
- Cross-check the return. Winnings, withholding, Schedule A and state returns should all agree.
What counts as a loss
Publication 529 lists expenses connected with gambling, such as travel to a casino, in its gambling-loss discussion. It does not settle whether recreational gamblers can deduct travel or meals. Do not assume they can. Ask a tax adviser before claiming them.
A note on sessions
IRS chief counsel analysis (AM 2008-011) looked at casual slot play where tokens are redeemed at the end of a session. Its example reports $350 of gains separately from $610 of losses, not a net loss on the income line. That memo is nonprecedential. A 2015 proposal for a slot-play session method (Notice 2015-21) was never a general rule for all gambling.
How the 90% Gambling-Loss Rule Changes the Calculation
Know your tax year first
Public Law 119-21, enacted July 4, 2025, amends IRC 165(d). It applies to taxable years beginning after December 31, 2025. The tax year decides which rule applies, not the date you file. For 2025, losses are deductible up to winnings. From 2026, an extra percentage limit applies.
What the limit means
The statute says the deduction "shall be equal to 90 percent of the amount of such losses" and only "to the extent of the gains." This limits the deduction. It is not a 90% refund or credit.
The calculation
The deduction is the lesser of 90% of qualifying losses or your wagering gains. The proposed regulations repeat this structure. The 90% is applied to losses first, not to a figure already capped at winnings.
Hypothetical 2026 examples
These are illustrations only:
| Scenario | Winnings | Losses | Deduction |
|---|---|---|---|
| Losses below winnings | $10,000 | $4,000 | $3,600 |
| Losses near winnings | $10,000 | $9,500 | $8,550 |
| Break-even | $10,000 | $10,000 | $9,000 |
| 2025 rule, break-even | $10,000 | $10,000 | $10,000 |
In the break-even case, $1,000 of income is still taxable even though you finished level. The Tax Foundation illustrates this with $1 million of winnings and losses, a $900,000 deduction, and about $37,000 of tax at an assumed 37% rate.
Planning consequences
- You can owe tax despite heavy losses, and from 2026 despite breaking even.
- Withholding may not cover the final bill; regular gambling withholding is 24% on covered payments with net proceeds over $5,000
- Bingo, keno, and slots are generally not subject to that withholding
- Estimated payments generally apply when you expect to owe at least $1,000 after withholding and credits. Check Form 1040-ES.
No planning method is guaranteed to remove the tax.
Records, Itemising, and Common Filing Mistakes
Build a records checklist
The IRS wants a diary or similar record. Include:
- Date and type of gambling
- Name and location of the casino or platform
- Amounts won and lost
- Names of other people present, where relevant
- Supporting documents such as W-2Gs, tickets, bank withdrawals and statements
Save digital statements as PDFs before accounts close. If you use several betting accounts, reconcile deposits, withdrawals and balances across all of them.
Records matter. In Rios v. Commissioner (T.C. Memo. 2012-128), taxpayers claimed $86,600 and $214,140 in losses for two years. The Tax Court disallowed them because there was no reliable log.
W-2G mismatches
A missing W-2G does not remove the duty to report. As IRS Topic 419 states, winnings are taxable regardless. The IRS matches information returns against your return, and a mismatch can trigger a CP2000 notice. That notice is a proposed adjustment, not a bill.
Reporting thresholds also differ from withholding thresholds. The January 2026 W-2G instructions introduce a $2,000 minimum for some categories, with game-specific conditions.
Mistakes to avoid
- Reporting only net winnings
- Claiming losses with no reported winnings
- Claiming losses while taking the standard deduction
- Exceeding the deduction limit
- Relying on incomplete records
- Ignoring state or nonresident filing rules
Special Situations That Can Change the Reporting
Recreational versus professional gambler
Professional status depends on facts, not on how you describe yourself or how much you win. Commissioner v. Groetzinger (1987) looks for continuity, regularity and a primary profit purpose. Professionals report on Schedule C. Section 165(d) still limits losses, and business expenses are included in that limit.
Online play, multiple states and noncash prizes
Federal treatment does not decide state outcomes.
- Michigan allows casual gamblers to deduct losses only if they itemise federally, and limits nonresidents to Michigan casino and racetrack gains
- Massachusetts can tax nonresidents on state-source winnings and limits losses to qualifying transactions
- Nonresident aliens generally face 30% tax on U.S.-source winnings, subject to treaty relief; certain nonbusiness table-game winnings are exempt
- Nonwager sweepstakes prizes are reported on Form 1099-MISC, while wagers use Form W-2G
U.S. citizens and resident aliens living overseas, including Australians with U.S. status, generally report worldwide income. Living abroad does not remove U.S. tax on gambling winnings.
When to get a professional review
Complex records, several states, or cross-border status can make filing hard to handle alone. VJM Global's tax compliance team, including CPAs and U.S.-compliant professionals, can review gambling records and federal or state filing requirements.
This is general information, not tailored advice, and no outcome is guaranteed.
Frequently Asked Questions
Where do I deduct gambling losses?
Recreational losses generally go on Schedule A as an itemised deduction. They are limited by your winnings and by the rules for your tax year.
Can I claim back gambling losses?
No one reimburses them. Losses can reduce taxable income only through an allowed deduction, when you report winnings, itemise and keep documentation.
What is the 90% deduction on gambling losses in the US?
From tax years beginning after December 31, 2025, the deduction is limited to 90% of losses, and no more than winnings. It is not a refund. Confirm the year and the latest IRS guidance.
Where do gambling winnings go on Form 1040?
Winnings go on Schedule 1 (line 8b for 2024 and 2025) and carry to Form 1040, line 8. You report them even without a W-2G.
Can I deduct gambling losses if I take the standard deduction?
Generally no. Recreational losses need itemising on Schedule A, so a taxpayer using the standard deduction usually cannot claim them.
