Both cash and noncash gambling winnings are fully taxable.

Cash winnings include money received from:

• Lottery payouts
• Sweepstakes
• Bingo
• Raffles
• Poker and other games
• Keno
• Slot machines

If you win a noncash prize -- like a vacation or a car -- you must include its fair market value when figuring your income.

If you itemize your deductions, you can deduct your gambling losses for the year on Schedule A. However, you can only deduct your loss up to the amount you report as gambling winnings. So, you should:

• Keep an accurate diary of your gambling winnings and losses.
• Keep  documentation of your gambling activity that can be verified.

The payer must provide you with a Form W-2G if you win:

• $600 or more if the amount is at least 300 times the wager
• $1,200 or more in winnings from bingo or slot machines
• $1,500 or more in winnings from keno
• More than $5,000 in winnings from a poker tournament
• Any winnings subject to a federal income-tax withholding requirement

If winnings are reported on Form W-2G, federal taxes are withheld at a flat rate of 25%. If you didn’t give the payer your tax ID number, the withholding rate is 28% (28%). Withholding is required when the winnings, minus the bet, are:

• More than $5,000
• At least 300 times the amount of the bet

You should receive a copy of Form W-2G showing the amount you won and the amount of tax withheld. Even if you don't receive a Form W-2G, include your winnings on your return.