Can I deduct my non-winning lottery tickets as gambling losses on taxes? What about scratch-offs?

Hey tax people! So I've been playing the lottery pretty regularly over the past year (I know, I know... but someone's gotta win eventually right?). Anyway, I've got a shoebox FULL of losing tickets - probably spent around $1,200 on various state lotteries and another $800 or so on scratch-offs throughout 2024. I remember hearing somewhere that gambling losses can sometimes be written off, but I'm not sure if lottery tickets actually count as "gambling" in the IRS's eyes. Do non-winning lotto tickets qualify for any kind of tax deduction? Should I keep hanging onto all these losers? And does it make any difference if they're scratch-offs versus regular lottery tickets? I'm planning to itemize this year since my mortgage interest puts me over the standard deduction anyway, so if there's any legitimate way to get something back for all these tickets, I'd love to know!

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20 comments

CyberNinja

Yes, you can definitely deduct gambling losses, including non-winning lottery tickets and scratch-offs, but there are some important limitations you need to know about. First, you can only deduct gambling losses up to the amount of your gambling winnings for the year. So if you won $500 in gambling activities but spent $2,000 on lottery tickets, you can only deduct $500 of those losses. If you didn't win anything at all during the year, unfortunately you can't deduct any of your losses. Second, as you mentioned, you must itemize deductions on Schedule A to claim gambling losses - you can't take the standard deduction AND claim gambling losses. Since you're already planning to itemize due to mortgage interest, this works in your favor. Third, keep ALL those tickets as documentation! The IRS can be picky about gambling loss documentation, so your shoebox of tickets is actually perfect evidence. You should also keep a simple log of your gambling activities - dates, locations, types of gambling, amounts won and lost.

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CyberNinja

That's correct - you can only deduct losses up to the amount of your documented winnings. The tax code sees gambling as a recreational activity, not a business expense, which is why there's this limitation. For proof of winnings, it depends on the amount. For prizes of $600 or more, you should receive a W-2G form. For smaller winnings, keep whatever documentation you can - ATM receipts showing withdrawals at casinos, bank statements, winning tickets, etc. A personal log is also valuable, especially if it's consistent with your other records. The more documentation you have, the better positioned you'll be if questioned.

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Aisha Abdullah

After struggling with similar questions about my gambling deductions last year, I found this amazing tool called taxr.ai (https://taxr.ai) that literally saved me hours of research. I uploaded pictures of my lottery tickets and some casino receipts, and it analyzed everything and told me exactly what I could deduct based on my specific situation. The best part was that it explained WHY certain tickets qualified and others didn't - apparently some of my horse racing bets had different rules than my casino losses. It also generated a perfectly organized log of all my gambling activity that I could print out for my records in case of an audit.

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Aisha Abdullah

For online gambling, absolutely! You can upload your online poker statements and it'll parse through them to categorize everything correctly. It's actually even more accurate with digital records than physical tickets since it can capture all the transaction details. As for state vs federal differences, that's one of the things that impressed me most. It shows you both the federal guidelines and then any state-specific rules that apply based on your location. For example, in my state, there are additional documentation requirements that the federal return doesn't need, and taxr.ai flagged those for me specifically.

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Ethan Davis

Just wanted to follow up about that taxr.ai site someone mentioned. I was skeptical but tried it with my online poker statements that I've been putting off dealing with for months. Holy crap it was impressive! It separated my tournament fees from actual losses, identified my winning sessions vs losing ones, and explained exactly how to report everything. It even caught a mistake I'd been making for YEARS where I was counting certain tournament rebuys as separate losses when they should've been combined. Apparently I've been over-reporting my losses which could have triggered an audit. Definitely recommend if you're dealing with gambling deductions!

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Carmen Ortiz

If you're going to claim lottery tickets as gambling losses, be prepared for the IRS to question it. When I tried doing this two years ago, I got stuck in an endless loop of trying to reach someone at the IRS to explain my situation. After WEEKS of trying, I finally found Claimyr (https://claimyr.com) and watched their demo (https://youtu.be/_kiP6q8DX5c). Their service actually got me through to a real human at the IRS in under 45 minutes when I'd been trying for days on my own. The IRS agent helped me understand exactly what documentation I needed for my gambling losses and how to properly record them. Seriously saved me from making a big mistake on my return.

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Carmen Ortiz

It essentially navigates the IRS phone tree for you and stays on hold in your place. When a real person finally picks up, it calls your phone and connects you directly to that agent. It's like having someone sit on hold for you for hours so you don't have to. They use some kind of technology that keeps the connection active and monitors for when a human actually answers. I was super skeptical too, but when my phone rang and I was instantly connected to an actual IRS representative without sitting through the hold music for 3 hours, I was completely shocked. It literally saved me days of frustration.

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Andre Laurent

Had to come back and eat my words about that Claimyr service. After getting frustrated enough with my gambling loss questions, I tried it yesterday. I figured it wouldn't work but was desperate after trying to call the IRS myself for THREE DAYS. Got a call back in about 35 minutes and was connected to an actual IRS agent who walked me through exactly how to document my lottery tickets and other gambling losses. She explained I needed to keep a diary of all gambling activities with dates/locations/people present/amounts won and lost - along with my actual tickets as physical proof. Would've taken me weeks to figure this out on my own if I could even get through. Never been so happy to be wrong about something!

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Zoe Papadopoulos

Digital records can work, but physical records are still preferred. If you do go digital, make sure your photos clearly show the entire ticket including date, serial number, and price. Store them organized by date and type, and back them up securely. I'd recommend keeping the physical tickets for at least 3 years (the standard IRS audit window) if possible. Maybe find a storage solution that takes up less space, like scanning them and then storing the physical tickets in labeled envelopes by month. That might keep both you and your wife happy!

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PixelWarrior

If you buy lottery tickets as gifts, those aren't your gambling losses - they're gifts. Since you're not the one who would potentially win, you can't claim the loss. The person who receives the ticket would be the one who could potentially claim a loss (though they'd need to document that you gave it to them, which is practically impossible). Think of it this way: if the ticket you gifted won $1 million, you wouldn't be the one claiming that on your taxes - the recipient would. So you can't claim the losses either.

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StarSeeker

Great question! As others have mentioned, yes - lottery tickets absolutely qualify as gambling losses under IRS rules. But here's a critical detail that hasn't been fully addressed: you need to be extremely careful about HOW you calculate your losses. Many people make the mistake of just adding up all their losing tickets, but the IRS wants you to calculate losses on a "session" basis. For lottery tickets, each drawing is typically considered a separate session. So if you bought 10 tickets for the same Powerball drawing, that's one session where you either won something or lost the total amount spent on all 10 tickets. Also, don't forget that even small winnings count! If you won $5 on a scratch-off but spent $20 on tickets that day, your net loss for that session is $15, not $20. A lot of people overlook small wins and end up over-reporting their losses. Keep those tickets organized by drawing date and type of game - it'll make your life much easier come tax time. And remember, you'll report gambling losses on Schedule A, line 16 under "Other Itemized Deductions.

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