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Learn about gambling and the lottery in Massachusetts

View tax information on gambling and the state lottery in Massachusetts. Find out how to report your winnings, what they mean for your tax returns, and more.

Part-year residents are taxed on gambling and lottery winnings received as a Massachusetts resident.

Nonresidents are taxed on gambling and lottery winnings from Massachusetts sources. This includes:

  • Casinos and slots parlors located in Massachusetts
  • Massachusetts lottery
  • Multi-jurisdictional lottery if the ticket was bought within Massachusetts
  • Pari-mutuel wagering paid by Massachusetts racetrack or simulcast center
  • Any other wagering transaction within Massachusetts

Massachusetts allows you to deduct the cost of any winning ticket or chance from the winnings you received from it, reducing your taxable lottery and gambling income. Even if you buy other tickets during the year, you can only deduct the cost(s) of the winning ticket(s). You cannot deduct losses you claim as itemized deductions on U.S. Form 1040, Schedule A.

Please note: If you were a Massachusetts resident for part of the tax year, and while you were not a resident of Massachusetts you received Massachusetts gambling or lottery income, file as both a nonresident and part-year resident. Fill in the “Filing as both a nonresident and part-year resident” oval below the address section of the form if this category applies to you. Complete Schedule R/NR, Resident/Nonresident Worksheet, to calculate the portion of income earned while a nonresident and the portion of income earned while a part-year resident.

If you're submitting an abatement/amended tax return, attach:

  • The corrected Form W-2G, Certain Gambling Winnings
  • Documentation to prove the correct winnings

Gambling winnings

Cash winnings are included in federal gross income and so you must include it in Massachusetts gross income. Cash winnings include:

  • Dog and horse track betting, jai alai, and other wagering transactions
  • Sweepstakes and wagering pools
  • Bingo or beano, keno and slot machines
  • Poker tournaments, including casinos
  • Raffles or any other events of chance

Gambling winnings also include the fair market value of non-cash prizes such as cars, houses, and trips.

Reporting gambling winnings (Massachusetts and out-of-state)

For federal purposes, report your total winnings on your U.S. Form 1040 Schedule 1 and report all your losses (cost of buying all your tickets for the taxable year, not only your winning ones, and only up to as much as you won) on U.S. Form 1040, Schedule A, Itemized Deductions.

For Massachusetts purposes, report your net winnings (total winnings minus cost of winning ticket(s)) on MA Form 1 or MA Form 1-NR/PY (Schedule X, Line 3). Do not enter less than "0."

When filing, you'll be notified if you didn't report your gambling winnings, or if the amount you reported doesn't match our records. If you indicate that you didn't have any winnings, the system will allow you to proceed. However, your tax refund will be held up and you'll receive a letter requesting that you submit documentation to verify the correct amount.

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Lottery winnings

You must include winnings from the Massachusetts state lottery and non-Massachusetts lotteries in your Massachusetts gross income.

If you win more than $600 the payer must give you a Forms W-2G when you receive your winnings. If not, they must send you the form before January 31 of the following year.

If you win more than $5,000, you will also be taxed federally. When winnings include items that are non-cash prizes (e.g., a car or a boat), the items will be assessed at their fair market value.

If you owe any past-due child support or a past-due tax liability, the State Lottery Commission will notify the Commissioner of your name, address, and Social Security number and send the winnings to the Child Support Enforcement (CSE) Division or appropriate division to satisfy your child support obligations or past due liabilities.

The Lottery Commission pays out winnings in this order:

  1. Statutory state and federal tax withholding
  2. The full or partial amount of the prize to satisfy any past-due child support obligation
  3. The full or partial amount of the prize to satisfy any past-due tax liability
  4. The rest of the prize (after liabilities have been paid) goes to you

We routinely match the amounts in MA Form 1 (Line 8b) or Form 1-NR/PY (Line 10b) with files from the Lottery Commission.

Reporting lottery winnings

For federal purposes, report your total winnings on your U.S. Form 1040, Schedule 1 and report all your losses (cost of buying all your tickets for the taxable year, not only your winning ones, and only up to as much as you won) on U.S. Form 1040, Schedule A, Line 16 Miscellaneous Deductions.

For Massachusetts purposes:

  • Massachusetts state lottery winnings - Report your net winnings (total winnings minus cost of winning ticket(s)) on MA Form 1 (Line 8b) or MA Form 1-NR/PY (Line 10b). Do not enter less than "0." You cannot deduct losses claimed as itemized deductions on U.S. Form 1040, Schedule A.
  • Out-of-state lottery winnings - Report your net winnings (total winnings minus cost of winning ticket(s)) on MA Form 1 or MA Form 1-NR/PY (Schedule X, Line 3). Do not enter less than "0." You cannot deduct losses claimed as itemized deductions on U.S. Form 1040, Schedule A.

When filing, you'll be notified if you didn't report your gambling winnings, or if the amount you reported doesn't match our records. If you indicate that you didn't have any winnings, the system will allow you to proceed. However, your tax refund will be held up and you'll receive a letter requesting that you submit documentation to verify the correct amount.

Additional Resources for

Gambling and lottery losses

Losses occur when:
  • The total amount you paid to gamble is greater than your total gambling winnings, or
  • The total cost of lottery tickets is more than your total winnings on those tickets

For Massachusetts purposes, losses (up to as much as winnings) aren't deductible even if they may be claimed as an itemized deduction on U.S. Form 1040 (Schedule A). The exception is gambling activities that are considered a trade or business or any gambling establishment in accordance with MGL Chapter 23K.

Under the new provision a taxpayer may claim a deduction for gambling losses incurred in a calendar year only if the losses were incurred at any gaming establishment licensed in accordance with MGL ch 23K or a racing meeting licensee or simulcasting licensee and only if the taxpayer had wagering winnings from any such gaming establishment licensed in accordance with MGL ch 23K or a racing meeting licensee or simulcasting licensee in the same calendar year. The deduction allowed for such losses may not exceed the amount of such winnings included in gross income for the calendar year.

For federal purposes, report your winnings and losses (up to as much as you won) on U.S. Form 1040, Schedule 1, and claim them on Schedule A under "Other Miscellaneous Deductions."

Per IRC § 165(d) the deduction for gambling losses has been limited. For tax years beginning before 2018, a professional gambler could deduct all trade or business expenses incurred in gambling activities, and could deduct gambling losses up to the amount of gambling winnings. Under the TCJA , all deductions for both business expenses and losses are capped at the amount of winnings. Massachusetts adopts this change as Massachusetts follows the current IRC in effect for trade or business expenses under IRC § 62(a)(1). See TIR 18-14 for more information.

 

    Gambling activities considered a trade or business

    You can deduct wagering losses (for as much as you won) from your personal income taxes, but only if your wagering activities are considered a trade or business.

    For professional gambling, your gambling activity is considered a trade or business if it is:

    • Pursued full time
    • In good faith
    • Done regularly
    • To produce income for a livelihood
    • Not a hobby

    The Commissioner will consider several factors when determining whether gambling activities constitute a trade or business or not. These factors are not exclusive and are meant to provide illustrative guidance. If you're claiming to be a professional gambler, the burden of proof rests with you.

    The following factors will be considered:

    • Gambling activities are entered into and carried on in good faith for the purpose of making a profit
    • Gambling activities are carried on regularly
    • Gambling activities are pursued on a full-time basis, or to the fullest extent possible if you're engaged in another trade or business or employment elsewhere
    • Gambling activities are solely for your own account and you don't function as a bookmaker
    • You keep adequate records, including accounting of daily wagers, winnings, and losses
    • The extent and nature of your activities further the development of a gambling enterprise
    • You claim deductions associated with conducting a trade or business for gambling-related expenses

    Reporting gambling activities considered a trade or business for tax purposes

    1. Enter the net amount from gambling activities you reported on MA Schedule C (Line 31 or 33) on MA Form 1 (Line 6a) or MA Form 1-NR/PY (Line 8a)
    2. Enclose MA and U.S. Schedule C, or C-EZ, or U.S. Schedule F

     

     

    Page updated: May 18, 2020

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