Gambling winnings or losses?

Gambling winnings or losses?

Mike Habib, EA

As a US taxpayer, you can deduct gambling losses only if you itemize your deductions on form 1040. You can claim your gambling losses as a miscellaneous deduction on IRS Form 1040, Schedule A. However, the amount of losses you deduct can not total more than the amount of gambling income you’ve reported on your return. It’s important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

The IRS provides the following guidelines for proving gambling winnings and losses:

An accurate diary or similar record regularly maintained by the taxpayer, supplemented by verifiable documentation usually is acceptable evidence for substantiation of wagering winnings and losses. In general, the diary should contain at least the following information

  • Date and type of specific wager or wagering activity
  • Name of gambling establishment
  • Address or location of gambling establishment
  • Name(s) of other person(s) present with you at gambling establishment
  • Amount(s) won or lost

Verifiable documentation includes, but is not limited to:

  • Wagering tickets
  • Canceled checks
  • Credit records
  • Bank withdrawals
  • Statements of actual winnings or payment slips provided by the gambling establishment

When possible, the diary and available documentation of the placement and settlement of a wager should be supported by such documentation as:

  • Hotel bills
  • Airline tickets
  • Gasoline credit cards
  • Affidavits or testimony from responsible gambling officials regarding the wagering activity

Refer to IRS Publication 529, Miscellaneous Deductions, for information on record keeping. For additional information, refer to IRS Publication 525, Taxable and Nontaxable Income.

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