If you've been busy rolling the dice at a crap table in Vegas, playing the lottery now and then, or betting on your favorite team to win a few games, you may have accumulated some gambling winnings. While this is certainly putting a smile on your face, realizing you may need to report your gambling income at tax time may turn your smile into a frown. Are you in or are you out? Here's what you need to know about reporting your gambling income.

All Gambling Winnings are Taxable

Whether you were the person who had the hot hand at the craps table or played it cool with your buddies at your weekly poker game and came away with a few hundred dollars to show for your efforts, the bad news is that all gambling winnings, no matter how big or small they may be, are technically considered by the IRS to be income that is taxable.

In fact, any and all winnings you have from gambling, whether it's in the U.S. or somewhere else around the world, are taxable. Thus, when you sit down to discuss this with your CPA, don't be surprised if they tell you that those winnings you got from playing the slot machines, being a contestant on a game show, or even playing bingo are subject to taxation.

What if You Only Won $1.00?

Yes, even if you only won $1.00 gambling, the IRS and your state tax folks will expect you to report it on your taxes. Assuming you decide to report your winnings, you will do so by reporting the gross amount you received. Depending on the amount you won, your winnings may be reported on a W2-G. However, even if you are not issued a W2-G, you're still expected to report that one measly dollar you managed to win.

Don't Underestimate the Taxes You May Owe

When many people, especially those who win big at the lottery or on game shows, receive their checks, there is usually 24% withheld for taxes. However, this may not be the full amount that must be paid. Since the federal tax rate is significantly higher than 24%, don't be surprised if the IRS has its hand out wanting more of your money.

If you think this could be the case, plan on consulting with your CPA. After you've cut the cards, blown on the dice, and said a prayer or two, your CPA may suggest you send the IRS an estimated tax payment once you get your check. Also, expect your state to want its fair share as well, so make sure your CPA explains this to you during your conversation.

Can I Get Any Gambling Deductions?

If there is a bit of a silver lining to this roulette wheel of gambling income and taxes, it is that there are some deductions you can take on your taxes along the way.

However, before you start jumping for joy thinking you can somehow use the money you lost gambling to cancel out your winnings come tax time, have yet another talk with your CPA. According to the IRS, you assume the risk of losing when you decide to gamble. Because of this, you are not allowed to deduct certain gambling-related expenses, such as hotel, food, transportation, and cover charges at betting establishments.

Should you think your luck has finally run out, don't push aside your poker chips just yet. According to the IRS, gamblers are allowed to deduct all losses on their tax return, but only up to your winnings. Considered to be a miscellaneous itemized deduction, this may make it easier on you come tax time. Unfortunately, your CPA will tell you that unless you meet the standard deduction amount, which is quite high, you probably won't qualify for this deduction.

What About Non-Cash Prizes?

Should you be a contestant on a game show and come away with a car, vacation, or other prize that is not cash, you may think you have found a way to bluff your way by the IRS and not have to pay out thousands of dollars in taxes for your winnings.

Unfortunately, Uncle Sam also has quite a poker face, and is already several steps ahead of you on this matter. According to the IRS, the fair market value of non-cash prizes, such as cars, trips, furniture, or other items is classified as gambling income, and thus is expected to be reported on your tax return.

Are You a Professional Gambler?

If you gamble not just now and then but rather consider it to be your chosen profession, you and your CPA will take a slightly different approach to your winnings.

If you are indeed a professional gambler, your winnings are considered to be regular earned income, meaning they are taxed at regular income tax rates. Specifically, your winnings would be reported as self-employed income, making them subject to not only federal and state income taxes, but also self-employment tax as well.

Should you claim to be a professional gambler, your CPA will strongly suggest you be telling the truth to the IRS. If you are caught in a lie, the casino bouncers you encounter will look like cupcakes compared to what the IRS may have in mind for you down the road.

Play it Safe, or Go All In?

Whether you decide to play it safe or go all in when it comes to reporting your gambling income, make sure you discuss all the details with your CPA. Rather than make a bad decision or an honest mistake on your return, take the advice of your CPA on reporting gambling income. By doing so, your lucky streak will continue.

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