Say you won $100 but spent $500 on Powerball tickets. The amount you won, $100, should be claimed as “taxable income.” But you also can deduct gambling losses – though the amount claimed can’t exceed the amount won. Therefore you can deduct $100.
The IRS requires you to keep a diary of winnings and losses in order to get the deduction. This includes the date and type of gambling, the name and address of where the ticket was purchased and the amount you won and lost.
And this isn’t just for the lottery. You can claim raffles, horse and dog races, casino games, poker games and sports bets.