Lottery

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Deducting Cost of Lottery Tickets

If you were lucky enough to win money in a lottery, you can deduct the cost of your losing tickets for the year as an itemized deduction. The amount of the deduction is limited to your lottery winnings. You can also deduct losses from other types of gambling against your lottery winnings. If a husband and wife file a joint return, they can use their qualified combined losses to offset their combined winnings.

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Sharing a Winning Lottery Ticket

Who will pay the taxes when you win the lottery pool? Form 5754, Statement by Persons Receiving Gambling Winnings, has been provided by the IRS to alleviate the problem of how to report multiple ownership of lottery tickets. The form is prepared by the person who actually receives the winnings and it identifies all those entitled to a share of the winnings. The federal taxes should already have been withheld by the lottery.

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