Keep a dated, activity-by-activity record of every gambling win and loss, save documents that corroborate the entries, and report winnings separately from losses. For a 2025 federal return, gambling winnings go on Schedule 1 (Form 1040), line 8b. Eligible losses are a separate Schedule A itemized deduction, limited to reported winnings. Starting with tax year 2026, the Schedule A deduction is limited to the lesser of 90% of losses or gambling winnings.
This guide covers U.S. federal individual income tax. State and local rules can differ, so check the instructions for every jurisdiction in which you file.
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What a tax-ready gambling record must show
The IRS states in Publication 529: “You must keep an accurate diary or similar record of your losses and winnings.” A useful record does more than show an annual net result. It identifies each specific wager or gambling activity, records wins and losses as separate amounts, and links those entries to documents you can produce if the IRS asks for support.
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Record each activity or session, not just a yearly total
Start an entry when you place a wager or begin a gambling session. Use a separate line for each specific wager, drawing, tournament, or session that you can reasonably identify. A monthly or annual net number is not a substitute for the underlying activity record because the federal return treats winnings as income and losses as a potential itemized deduction.
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Use the IRS minimum fields
- Date: the date of the wager or activity.
- Type: the specific activity, such as a casino game, sports wager, lottery or raffle ticket, bingo, fantasy sports contest, or another wager.
- Establishment and location: the gambling establishment’s name and its address or location. For online activity, identify the platform and the relevant jurisdiction in your own records.
- People present: the names of other people present at the establishment.
- Amount won: record wins separately from losses.
- Amount lost: record losing wagers and other deductible gambling losses separately from wins.
These fields come from the recordkeeping guidance in IRS Publication 529. You can use a paper diary, a spreadsheet, or another durable record; the IRS does not require a particular notebook, application, or commercial service.
Build a tracking system you can reconcile
Paper diary
A bound or dated ledger works when you carry it with you and enter activity promptly. Leave enough space for the activity description, venue and location, people present, win, loss, and a reference to supporting documents. Photograph or scan completed pages and store the images with your tax records so a damaged or lost notebook does not erase the record.
Spreadsheet
A spreadsheet makes separate win and loss columns and year-end totals easy to calculate. Add columns for the date, activity, venue, location, people present, win, loss, document reference, and notes about noncash prizes or installment payments. Protect the file from accidental edits and retain a dated copy at the end of each month or quarter.
What a practical log looks like
| Field | What to enter |
|---|---|
| Date | Date of the specific wager or activity |
| Activity | Game, ticket, contest, sports wager, fantasy sports activity, or other specific type |
| Establishment and location | Name plus address or physical location; identify an online venue in your notes |
| People present | Names of other people present at the establishment |
| Winnings | Gross amount won for that entry |
| Losses | Amount lost for that entry, recorded independently |
| Document reference | W-2G, ticket, statement, bank record, or other corroborating item |
| Notes | Noncash prize details, fair market value, installment information, or an explanation of a reconciliation difference |
Do not make the log your only evidence. The diary captures what happened; third-party and financial records help corroborate it.
Save documents that support the diary
Publication 529 identifies several types of records that can generally help prove gambling winnings and losses:
- Form W-2G, Certain Gambling Winnings.
- Form 5754, Statement by Person(s) Receiving Gambling Winnings.
- Wagering tickets and similar proof of the wager.
- Canceled checks or substitute checks.
- Credit-card and other credit records.
- Bank withdrawals.
- Statements of actual winnings or payment slips from the gambling establishment.
Keep each document with, or clearly linked to, the corresponding diary entry. For example, give a ticket an entry number and put that number in your spreadsheet; retain the establishment statement for the same date or session. Keep electronic statements in their original downloadable form when possible, not only as a screenshot.
W-2G information
A W-2G is evidence of a reported winning and any federal withholding, but it is not a complete record of all gambling activity. Reconcile every W-2G to your log and account records, and investigate differences. A missing W-2G does not make winnings nontaxable; gambling winnings must still be included in income.
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Noncash prizes
Record the description of every noncash prize and its fair market value. Bonds, cars, houses, and other noncash prizes are generally included in income at fair market value. Keep the award notice, valuation information, and the date you received the prize with the related diary entry.
Installment and sold lottery payments
For a state lottery prize paid in installments, retain the payment schedule and report annual payments and amounts designated as interest as you receive them. If you sell future lottery payments for a lump sum, keep the sale agreement and report the amount received as ordinary income in the year you receive it.
Reconcile your records before filing
- Close the activity log for the tax year. Confirm that each entry has a date, activity, venue and location, people present, and separate win and loss amounts.
- List every information form. Gather all W-2G and 5754 forms and note the winning amount and withholding shown on each.
- Compare financial records. Match tickets, establishment statements, bank withdrawals, credit records, canceled checks, and payment slips to the appropriate diary entries.
- Investigate differences. A form may cover one payment while your diary covers a session, or a prize may be noncash. Document the explanation rather than silently changing the totals.
- Separate gross winnings from losses. Calculate the total winnings independently from total losses. Do not replace either total with only the amount left after netting.
- Classify unusual items. Mark noncash prizes, installment payments, sold future payments, and any activity connected with a possible gambling trade or business for special review.
- Archive the completed file. Keep the diary, source documents, reconciliation, and filed return together in a dated tax-record folder.
How to report gambling winnings for tax year 2025
For 2025 federal individual returns, report gambling winnings, including fantasy sports winnings, as income on Schedule 1 (Form 1040), line 8b. Report the winnings amount without subtracting gambling losses on that line.
If you received Form W-2G
Use box 1 of each W-2G as the reported winning amount when preparing the 2025 return. If federal income tax was withheld, claim the amount in box 4 on Form 1040 or Form 1040-SR, line 25c. Keep the W-2G with your records and compare it with your own diary; the form does not replace that diary.
If you did not receive Form W-2G
You still must report taxable gambling winnings. The reporting duty is based on the winnings, not on whether a payer issued a W-2G. Use your diary and supporting records to determine the amount, and retain those records in case the return is questioned.
Why netting winnings and losses is incorrect
Suppose your records show $12,000 of winnings and $9,000 of losses. The 2025 federal return reports $12,000 of winnings on Schedule 1, line 8b; it does not report only the $3,000 difference there. The $9,000 loss amount is considered separately under the Schedule A rules if you itemize.
How the 2025 gambling-loss deduction works
You must itemize
For tax year 2025, gambling losses are deductible only as an itemized deduction on Schedule A. A taxpayer who takes the standard deduction cannot claim a separate federal gambling-loss deduction.
The deduction cannot exceed reported winnings
The Schedule A instructions limit the deduction to gambling winnings reported on Schedule 1, line 8b. The limitation applies to the total eligible loss deduction, not merely to losses shown on a W-2G. Schedule A gambling losses include, but are not limited to, the cost of nonwinning bingo, lottery, and raffle tickets.
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Professional gambling activity
For tax years 2018 through 2025, IRS Publication 525 explains that professional gambling losses and expenses are limited to gambling winnings. A person carrying on gambling as a trade or business uses Schedule C. Whether your facts establish a trade or business is individual-specific; do not assume that frequent play alone creates professional status.
What changes beginning with tax year 2026
For activity in tax year 2026 and later, IRS Publication 505 and Internal Revenue Bulletin 2026-19 describe a new limitation: the Schedule A deduction is limited to the lesser of 90% of gambling losses or gambling winnings. This rule applies to the 2026 tax year; do not apply it to a 2025 return merely because the 2025 return is filed in 2026.
How the 90% limit works
| Reported winnings | Documented losses | 90% of losses | Maximum 2026 deduction |
|---|---|---|---|
| $10,000 | $10,000 | $9,000 | $9,000 |
| $10,000 | $8,000 | $7,200 | $7,200 |
| $10,000 | $20,000 | $18,000 | $10,000 |
The final column uses the lesser of 90% of losses and winnings. You still need to report winnings separately and meet the itemizing and documentation requirements that apply to the return.
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IRS Bulletin 2026-19 projects that 673,000 taxpayers will take an itemized wagering-loss deduction for tax year 2026. The bulletin also reports that, for tax year 2022, about 2.3 million taxpayers reported gains from wagering transactions on individual returns and approximately 670,000 of them claimed an itemized wagering-loss deduction. These are government estimates, not a determination of any individual taxpayer’s eligibility.
Choosing a recordkeeping method
| Method | Best use | Controls to include |
|---|---|---|
| Paper diary | Travel, in-person play, or anyone who prefers handwriting | Number pages, enter activity promptly, scan completed pages, and store them with supporting documents |
| Spreadsheet | Multiple venues, frequent activity, or easy annual reconciliation | Separate win and loss columns, preserve dated backups, and add document-reference and notes columns |
| Similar electronic record | People who need searchable entries or electronic attachments | Confirm it retains all IRS diary fields, exports a dated copy, and keeps attachments accessible |
The deciding question is not which format looks most sophisticated. It is whether the record captures the IRS fields, keeps wins and losses separate, can be matched to source documents, and remains available with your tax records.
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Common mistakes and how to correct them
Recording only the net amount
Problem: A statement or spreadsheet shows one annual figure after wins and losses are combined.
Correction: Reconstruct separate winnings and losses from tickets, statements, bank records, and other documents, then enter the underlying activity in the diary.
Waiting until filing season
Problem: Dates, venues, people present, and ticket details are difficult to remember months later.
Correction: Enter each activity when it occurs and set a regular reminder to attach documents and check the running totals.
Treating a W-2G as the complete record
Problem: Only W-2G amounts are reported, while other winnings or losses are ignored.
Correction: Use every W-2G as one reconciliation point, not as the full inventory of your activity. Include winnings shown by your complete records even when no W-2G was issued.
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Problem: A separate gambling-loss deduction is entered even though the taxpayer does not itemize.
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Correction: For 2025, gambling losses are a Schedule A itemized deduction and are unavailable as a separate federal deduction when the standard deduction is used.
Applying the 2026 limit to 2025 activity
Problem: The 90% cap is used on a 2025 return filed during 2026.
Correction: Match the rule to the tax year of the gambling activity. The 90% limitation begins with tax year 2026.
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Problem: Only cash received immediately is logged.
Correction: Record the prize’s fair market value, award date, payment schedule, interest designation, or sale of future payments, and retain the related paperwork.
Questions that require individual or state-specific review
Federal guidance does not settle every issue that can affect your return. Check state and local rules for your filing jurisdiction. Get individualized tax advice if you are determining whether an activity is a trade or business, received a large noncash prize, sold future lottery payments, shared winnings with other people, or have withholding and records that do not reconcile.
For federal filing, keep using the forms and instructions for the applicable tax year. The 2025 rules govern 2025 activity even when the return is filed in 2026; later-year instructions control later activity.
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