The Internal Revenue Service requires that you report all of your gambling winnings on your income taxes so they can be included as taxable income. The IRS also permits you to reduce your taxable income by the gambling losses you sustained up to your amount of gambling winnings. However, you can claim the deduction only if you itemize your income tax deductions, meaning you give up your standard deduction.
Determine your total gambling losses by consulting your gambling receipts. If you do not have proof of both your winnings and your losses, you cannot claim a deduction.
File your income taxes using Form 1040. Since the gambling losses deduction is an itemized deduction, you cannot use any other income tax form.
Report the amount of your gambling losses on line 28 of your Schedule A list of itemized deductions. In the space next to line 28, note that the deduction comes from gambling losses. The amount of your loss cannot exceed the amount of your gambling winnings that you reported as taxable income. This amount will be added to your other itemized deductions and the total reported on line 29 of Schedule A.
Transfer the value of all of your itemized deductions, including your gambling losses, from Schedule A to line 40 of your Form 1040 tax return. This amount will be used to reduce your total taxable income.
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."