If you gamble or buy lottery tickets and you’re lucky enough to win, congratulations! But be aware there are tax consequences. You must report 100% of your winnings as taxable income. If you itemize deductions, you can deduct losses but only up to the amount of winnings. You report lottery winnings as income in the year they’re actually received. In the case of noncash prizes (such as a car), this would also be the year the prize is received. With cash, if you take the winnings in annual installments, you only report each year’s installment as income for that year. These are the basic rules. Contact us with questions. We can help you stay in compliance with all the tax requirements.
