Imagine this: you’ve made it to the final showcase of a popular game show. You have just guessed how much a 72” television, a red 2017 Chevrolet Camaro and a week-long trip to Thailand would cost. Suddenly, the host announces that you have just won!
Thousands of people win big on game shows every year, from Who Wants to Be a Millionaire? to Family Feud, Wheel of Fortune to The Price is Right. The chance of hitting the jackpot is part of the thrill and excitement of game shows, but keep in mind you do need to report any prize winnings on your taxes. But it doesn’t have to be overwhelming! TurboTax makes it easy to report any prize winnings or gambling jackpots.
So, what qualifies as taxable prizes? The IRS has created the following seven facts you need to know about winnings:
- Gambling income includes – but is not limited to – winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes. (Like trips to Thailand!)
- Depending on the type and amount of your winnings, the payer might provide you with a Form W-2G and may have withheld federal income taxes from the payment.
- The full amount of your gambling winnings for the year must be reported on line 21 of IRS Form 1040. You may not use Form 1040A or 1040EZ – but no need to worry, TurboTax will handle this for you.
- If you itemize deductions, you can deduct your gambling losses for the year. Keep in mind, you cannot deduct gambling losses that are more than your winnings.
- It is important to keep an accurate diary or similar record of your gambling winnings and losses. If you deduct your losses, you should be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses if you need to provide substantiation.
Whether you’re racking up the dough at Vegas slot machines or getting the Daily Double on Jeopardy, TurboTax allows you to easily file your winnings. Have you ever appeared on a game show? Share with us your story below, and we may feature you on the TurboTax blog!