How to Pay Your Taxes on Your Scratch-Off Lottery Winnings

The IRS requires taxpayers to report all gambling winnings during a tax year.

Scratch-off tickets are a popular way to gamble a few dollars and try to win big --- prizes are often in the thousands of dollars. If you do win, you must report any income to the Internal Revenue Service. Gambling winnings --- including winnings from scratch-off lottery tickets --- are fully taxable. You're required to report the winnings from your scratch-off tickets on IRS Form 1040.

Things You'll Need

• IRS Form 1040

Instructions

1. Download and print a copy of Form 1040 from the IRS website.

2. Write "Gambling winnings" in the space in Line 21, then write the amount you won in the shaded box. Complete the rest of Form 1040 as usual.

3. Download a copy of Schedule A from the IRS website if you intend to itemize deductions. If you take the standard deduction, you don't need to download Schedule A.

4. Write "Gambling losses" in the text box at Line 28, then write the amount of your losses in the shaded box in Line 28. Complete the rest of Schedule A as usual.

5. File Schedule A and Form 1040 together.

Tips & Warnings

• Keep a written record of how much you lost purchasing tickets. You may be able to reduce your tax liability if you itemize deductions.

• Gambling losses can't exceed the amount of your winnings.

References

• IRS: Publication 529
• IRS: IRS Topic 419 --- Gambling Income and Losses

Resources

• IRS: Forms and Publications