Did you win in Draft Kings? Why You Should Read This.

The IRS congratulates and thanks you.

Gambling winnings, whether thousands of dollars on a sports championship or a few bucks from a lottery scratch-off ticket, are taxable income.

Some of the taxable winnings come via the hundreds of proposition bets that are connected with major sporting events.

And the Internal Revenue Service doesn't care one bit whether your wagers on the National Football League championship game were legal. It's immaterial to the them if the bet was legally placed at a Nevada sportsbook or made illicitly with a bookie or via a U.S.-banned online gambling website.

Money is money. And taxable money, a category that includes gambling and prize winnings, must be reported.

Here's how to let the IRS know about its cut of your luck. 

Look for tax statements: If you win at a casino, race track or other legitimate gambling venue, depending on the game of chance and amount you win, you could receive a Form W-2G from the betting parlor detailing your winnings. 

Sometimes the amounts won trigger withholding at 25 percent when the lucky gambler is paid. In other instances, a gambling establishment simply will ask winners for a tax ID (the individual's Social Security number) for tax-reporting purposes.

With or without withholding, if you get a W-2G, be sure to include the amount on the form on your tax return. The IRS will get a copy of this form, too, so if you don't report it, tax agents will come asking.

Use the long 1004 form: If you're one that can control the thrill (aka "a casual gambler), with a trip now and then to Las Vegas, Atlantic City or your nearest casino, you should report the annual total of all your gambling winnings, with and without W-2Gs, on line 21 of Form 1040.

The amount of prizes or awards, either the cash you received or the value of merchandise won, also goes here.

Take advantage of your losses: You'll want to use the long 1040 because you can itemize all your gambling losses on Schedule A to help offset your taxable winnings. You'll enter that amount in the "other miscellaneous deductions" section (line 28) of Schedule A.

The good news is that your bad bets will reduce your amount of taxable winnings.

The better news is that your gambling losses are not subject to the regular miscellaneous deduction's 2% threshold. 

The bad news is that you cannot use your bad betting luck to produce an income loss on your return. The losing bets can only offset the amount of gambling winnings you have. 

We're not saying you need to head to Vegas, Reno, Atlantic City, the local horse race track or the nearest lottery ticket seller every day to wipe out any gambling wins. If you're doing that, you also should put the nearest Gamblers Anonymous chapter's phone number on your speed dial. (Gambling addiction is SERIOUS business. We see it a lot. We're not trying to be flippant. Please try to find help if your life is becoming unmanageable from gambling. Start here > www.gamblersanonymous.org )

But don't just toss those losing tickets. If you do collect a big bet pay-off, your many more losses can help reduce the amount of winnings on which you'll owe tax.

Gambling records are key: To make sure you get the most from those bad bets, keep good records. 

You generally can prove your winnings and losses through official documentation like the previously mentioned W-2G or Form 5754, Statement by Person(s) Receiving Gambling Winnings.

Other gambling winnings and losses can be verified by wagering tickets, canceled checks, substitute checks, credit records, bank and ATM withdrawals and statements of actual winnings or payment slips provided to you by the gambling establishment.

The IRS also suggests keeping your own documentation in the form of a diary (insert your own, "Dear Diary, the slot machines at ABC Casino suck, as in sucked up all my paycheck!" joke here) or similar log of your losses and winnings.

You can find more record keeping details based on the type of gambling you prefer, such as Keno, Bingo, poker, horse racing, etc., in IRS Publication 529.

You don't have to include your gambling records with your return, but they definitely will help you answer any IRS questions as to how you were able to reduce your $5,000 in winning Super Bowl bets to zero.

Tax timing: Finally, remember that your winnings from yesterday's game will go on your 2017 return due next year.

For the return due this April 18, you'll need to dig out your winning receipts -- and losing tickets -- from 2016 to get the correct amount to include on your 2016 tax filing.

As for yesterday's Super Bowl winnings, start the winnings/losings log noted earlier in this post now so you don't have to scramble for the info next year.

Have fun, keep records and the IRS will typically respond as we've indicated here. However, just as the outcome of a game can be unpredictable, so to is the IRS. And, again, if you're losing money you can't afford to, your relationships with family, friends and thugs, and your sense of well-being, get help. Gambling addiction is no laughing matter.