Overlooked Tax Deductions: Gambling Losses
If so, you may be entitled to a deduction.
Here is what you need to know at tax return time.
The most important rule The biggest single thing to know is that you can only deduct gambling losses for the year to the extent of your gambling winnings for the year.
This limitation applies to the combined results from any and all types of gambling — playing the lottery, slots, poker, the horses, and all the rest.
And the limitation applies to both amateur and professional gamblers.
Amateur gamblers After applying the losses-cannot-exceed-winnings limitation, the allowable gambling loss deduction for a person who is not a professional source is claimed on Line 28 of Schedule A Itemized Deductions.
Also, amateur gamblers can only deduct actual wagering losses.
Other gambling-related expenses transportation, meals, lodging, and so forth cannot be written off.
An amateur gambler should report the full click of his or her gambling losses are deductible as miscellaneous income on Line 21 on Page 1 of Form 1040.
If your winnings exceed your losses, you cannot just report the net winnings on Line 21.
continue reading, report your gross winnings on Line 21 and your losses up to the amount of your winnings on Line 28 of Schedule A, assuming you itemize.
Professional gamblers Over the years, quite a few court decisions have attempted to define what it takes to be a professional gambler.
The bottom line is you must gambling losses are deductible substantial time to gambling on a regular basis, and you must depend on gambling winnings as a meaningful source of income.
It also helps if you conduct your gambling activities in a businesslike fashion by keeping detailed records of wins and losses and developing and evaluating strategies.
If you can rightly claim professional gambler status, report your gross gambling losses are deductible as income on Line 1 of Gambling losses are deductible C of Form 1040 Profit or Loss from Business.
Report your losses up to the amount of your winnings and your allowable gambling losses are deductible gambling-related expenses read more transportation, 50% of out-of-town meal costs, out-of-town lodging, and so forth as business expenses on Schedule C.
In other words, you aren't required to combine out-of-pocket expenses with gambling losses in applying the losses-cannot-exceed-winnings limitation.
In some cases, this can make claiming professional gambler status more expensive than amateur status.
The IRS gets a copy too, so you better make sure the gross gambling winnings reported gambling losses are deductible Line 21 of your Form 1040 or on Line 1 of Schedule C if you are a professional at least https://bannerven.com/gambling/gambling-in-georgia-legal-status.html the sum of the amounts reported on any Forms W-2G you receive.
Record keeping basics Whether you are an amateur or professional gambler, you must adequately document the amount of your losses in order to claim your rightful gambling loss deductions.
According to the IRS, taxpayers must compile the following information in a log or similar record.
You can document winnings and losses from table games by recording the number of the table and keeping statements showing casino credit issued to you.
See also IRS Publication 529 Miscellaneous Deductions at www.
Per-session record keeping is apparently OK In theory, you gambling losses are deductible supposed to record each gambling win or loss — from each spin of the slot machine, each poker hand, and each horse race.
Of course, nobody actually does that.
Thankfully, the IRS relented a few years ago by saying that casual slot players can simply keep a record of the net win or net loss amount for each gambling session.
The Tax Court appeared to endorse this per-session approach in click the following article 2009 decision.
The casual slot player should then report the sum total of net winnings from all winning sessions as income on Line 21 of Form 1040 the amount should at least equal the total amount of winnings reported on any Forms W-2G you cheating at fish gambling />The sum total of net losses from all losing sessions can be deducted on Line 28 of Schedule A, subject to the losses-cannot-exceed-winnings limitation.
Presumably, the per-session approach of recording net wins and losses from each gambling session will see more be considered adequate record keeping for other types of gambling for both amateur and professional gamblers.
Poker players, take note!
Overlooked Tax Deductions: Gambling Losses
Casual gamblers may not realize they can deduct their gambling losses as professional gamblers do. They can, but there are some things to ...
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