FAQ-style: do I have to pay IL state tax on offshore casino winnings?

[newbie nadia chi]

Asking on behalf of myself and 3 friends I introduced to online casinos this year. I know we're all supposed to report gambling winnings on Schedule 1 line 8b (which flows into Form 1040) for federal, that's clear from the IRS instructions. But when I went looking for the IL state-level answer it got murky.

Specifically: if I'm playing on an offshore operator (not licensed by the Illinois Gaming Board), do I still have to report on Form IL-1040? My CPA said "yes, all gambling income regardless of source" but I'm seeing conflicting info on forums saying you only have to report wins from IL-licensed sources.

Not asking for legal advice — just want to know what the actual experienced players in this thread do. Do you 1099 yourself, do you keep session logs, do you just deduct losses to net it out?

[Jules (mod)]

Federal answer is unambiguous: all gambling winnings are taxable income regardless of source. IRS Pub 525. You can deduct losses up to winnings if you itemize, but only if you itemize, and the Tax Cuts and Jobs Act eliminated most household-level itemization which is why this question now matters for more people than it used to.

IL state level — the IL Department of Revenue position is that gambling winnings constitute taxable income for IL residents regardless of where the wagering platform is licensed. Practically this means yes, offshore wins are reportable on IL-1040. I'd second your CPA's answer. The folks saying "only IGB-licensed sources count" are confusing where the operator is licensed with where the player is taxed.

Disclaimer: I'm a mod, not a tax professional. If you have meaningful winnings get an actual CPA on it.

[payoutanalyst rex]

Practical advice from someone who's been doing this since 2019: keep a session log. Date, platform, deposit amount, withdrawal amount. That's it. You don't need to log every spin — just the session-level deposits/withdrawals are sufficient for tax purposes and for any future operator dispute.

Excel spreadsheet works fine. Some folks use specialized gambling-log apps but a simple spreadsheet has carried me through three years of clean filings without an audit flag. For practical record-keeping: Bovada and BetOnline both let you export deposit/withdrawal history as CSV — that's the cleanest paper trail if IDOR ever asks. Ignition has the same in account settings.