No. You cannot offset gambling winnings with losses directly on Form W-2G. This form only reports gross gambling winnings to the IRS. It does not factor in any gambling losses.
How to Handle Gambling Losses
If you want to offset your winnings with losses, you must do it when filing your tax return.
Itemizing Deductions
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You can only deduct gambling losses if you itemize deductions on Schedule A (Form 1040).
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If you claim the standard deduction, you cannot deduct gambling losses.
Limitations on Deductions
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The IRS allows deductions for gambling losses only up to the amount of your reported winnings.
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For example, if you report $5,000 in winnings, you can deduct up to $5,000 in losses—but not more.
Keeping Documentation
To claim losses, you must keep detailed records of your gambling activity.
This includes:
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Receipts, tickets, or statements from casinos or other gambling establishments.
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A written log with dates, amounts wagered, games played, and results.
Why You Can’t Net Winnings and Losses on Form W-2G
The IRS requires casinos and other payers to report gross winnings on Form W-2G.
This rule ensures accurate reporting and allows you to deduct losses separately on your return.
Example
Imagine you win $2,000 on a slot machine but lose $1,500 later the same day.
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Form W-2G will still show $2,000 in winnings.
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On your tax return, you can itemize deductions and offset those winnings with up to $1,500 in losses—if you have enough other deductions to itemize.
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This would reduce your taxable gambling income to $500.