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Kip Tips

The IRS Wants to Know If You Pick a Derby Winner

Or if you have gambling winnings of any kind.

If you're off to the races this weekend -- or just betting on the Kentucky Derby from afar -- Uncle Sam wants to know if you pick the winning horse. Come tax time, you'll have to report your gambling winnings on Form 1040.

All winnings from lotteries, raffles, casinos and, yes, horse races are taxable. The fair market value of prizes, such as cars, also must be reported.

You also can deduct gambling losses up to the extent of winnings you report as taxable income. You must itemize to use this write-off, but the deduction is not subject the rule that trims miscellaneous expenses by 2% of your adjusted gross income. To deduct losses, you also must have receipts or records that show the amount of your winnings and losses.