are lottery tickets tax deductible
How to Deduct Lottery Ticket Purchases on Income Tax. There's nothing more fun than winning when you gamble, especially if you win the lottery. Of course, for the millions of people who fail to accomplish this, there is the consolation of a potential tax deduction. Even if you win a lawsuit, you may have to pay the IRS, even on your attorney’s fees paid directly to your lawyer. When people talk of paying tax on money they never see—like money paid to a contingent fee lawyer from a case—it is usually because of the AMT. Not every lottery case involves co-workers or friends. Gambling winnings are fully taxable and you must report the income on your tax return. Gambling income includes but isn't limited to winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes, such as cars and trips. Generally, you can deduct contributions of money or property you make to, or for the use of, a qualified organization. A contribution is “for the use of” a qualified organization when it is held in a legally enforceable trust for the qualified organization or in a similar legal arrangement. Knowing what you can and can't claim as charitable contributions helps you maximize the potential tax savings that the charitable tax deduction offers. Americans have used charitable donations to lower their taxable income since World War I, when the federal government introduced the charitable tax deduction. The gift that's not a gift. Tax preparers frequently find themselves presenting bad news to clients seeking charitable deductions for bingo games, raffle tickets or lottery-based drawings used by organizations to raise money. A lot of people think fund-raising tickets are deductible; they are not, Parquette says. The amount you claim as a deduction for the tax year as a result of the contribution if you contribute less than your entire interest in the property during the tax year. Your records must include the amount you claimed as a deduction in any earlier years for contributions of other interests in this property. Gambling Losses. You may deduct gambling losses only if you itemize your deductions on Form 1040, Schedule A (PDF), and kept a record of your winnings and losses. The amount of losses you deduct can't be more than the amount of gambling income you reported on your return. Claim your gambling losses up to the amount of winnings, as an Other Miscellaneous Deduction (line 28) that's not subject to the 2% limit. Add up all of your gambling winnings for the year, if any, and then your losses, including all lottery ticket expenses. Compare the two totals. Deduct all of your losses as miscellaneous itemized deductions if they total less than your winnings. Deduct only the amount of losses equal to your winnings if your winnings exceeded your losses. Your deduction for charitable contributions generally can't be more than 50% of your adjusted gross income (AGI), but in some cases 20% and 30% limits may apply. See Limits on Deductions , later. In addition, the total of your charitable contribution deduction and certain other itemized deductions may be limited.
Yes, there is the consolation of a potential tax deduction.