I believe you can only deduct gambling loses to offset gambling winnings.

In MA, probably the same in most every state, you can deduct any gambling costs you have proof of when you claim any gambling profit. If you win at the track, for example, and you claim it, you can use any scratch tickets, keno, quick picks, or whatever losing tickets, of any kind, you find in the trash or on track floor & HAVE to pick up if the win is big enough, esp if you want to prove it's a loss. You also need to think about your current proof of gambling loses before running to cash in that MIL you scratched yourself on Dec 31st. :) If you do win that Million, or anything worthy of a tax claim, be prepared for hours & days or even longer of sorting & documented every $1, or even less, losing ticket you & everyone you know finds to protect your winnings. Time consuming as it is though you will HIT a few highs when you find all sorts of that extra cash in the many many "losing" tickets that prove "One Man's Trash is TRULY Another Man's Treasure" It's acutally amazing how much money is thrown away on "losing" tickets besides their actually cost. It is not an easy claim to justify if the profit is worth claiming and/or it is too late in the year to prove a loss. A win of only $1000 is at best 100 $10 losing tickets to break even which is nothing compared to the $50,000 winner experience I speak from. Anyone who gambles regularly should really consider ALWAYS saving those losers if they are ever hoping to HIT THE LOTTERY!

Losses are deductible only if a taxpayer can itemize, and are shown as a "miscellaneous deduction." The aggregate of all deductions in the miscellaneous category must be more than 2% of his/her adjusted gross income to be deductible, making the likelihood of being able to deduct most gambling losses small.

Thanks goodguest; I appreciate the advice. The hell with them. This country prides itself on taken from the poor to give to the rich. One persons trash is anothers persons treasure. Your advice was truly helpful. If the person who bought the ticket cared enough to protect his/her purchase he would not have thrown it away.

Very good question.

You can only deduct the amount you loss up to to the amount you won. For example, so far this year I blew $35,000 in various gambling games: lottery tickets, scratchers and the slots. I've won thus far $25,000 therefore I can only write off $25,000 even though I loss more. My trick this year, is to pay taxes on most of the WGs that were generated from the wins from the casinos, so that next year the IRS will be paying me! (I will have hopefully overpaid my taxes with some of the my wins!) Also, be careful when you are just picking up those losing scratchers or race track tickets off the floor, the proof is not only in that losing ticket for example, if your income doesn't match up - the IRS will surely catch on! And you know, the losing track ticket has date and time of bet, Think of this: will you be able to prove you were there at that specific time and date of that bet? Best of Luck, Catchmeifyoucan

From the IRS site: IRS TAX TIP 2007-33 Gambling winnings are fully taxable and must be reported on your tax return. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos, as well as the fair market value of prizes such as cars, houses, trips or other noncash prizes. Depending on the type and amount of your winnings, the payer might provide you with a Form W-2G and may have withheld federal income taxes from the payment. Here are some general guidelines on gambling income and losses: * Reporting winnings: The full amount of your gambling winnings for the year must be reported on line 21, Form 1040. You may not use Form 1040A or 1040EZ. * Deducting losses: If you itemize deductions, you can deduct your gambling losses for the year on line 27, Schedule A (Form 1040). You cannot deduct gambling losses that are more than your winnings. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses. For more information see IRS Publication 529, Miscellaneous Deductions, or Publication 525, Taxable and Nontaxable Income, both available on the IRS Web site, IRS.gov, or by calling 800-TAX-FORM (800-829-3676).

I am looking for about the same answer. I see where to put the winnings on a form in my tax cut program but do not see where to put that I spent that much to offset the winningsl

I found on irs.gov you put the winnings on w2-g form and put the same amount if you spent that much on 1040 miscellaneous dedutions if you itemize deductions. You can't deduct it says if you don't itemize.