Can you write off gambling losses? The thought of the IRS and the tax bill looming despite your losses often takes all the excitement of gambling. However, there’s good news for you. You can offset your gambling losses on your tax return and reduce your tax liability. All it takes to turn your gambling losses into a tax write-off is accurately detailed record keeping and some know-how.
So, can you write off gambling losses? In this casino news, you’ll learn how to do that, from documenting your loss and filling out the tax forms to the procedures for claiming these losses.
Can You Write Off Gambling Losses: What the Law Says
Gambling losses are what they sound like exactly: the money you’ve lost while gambling. These losses can be from casino games, sports betting, lottery, horse racing, and poker. And just like winnings, losses must also be reported to the IRS.
Examples of gambling losses include money lost at slot machines, poker tournaments in casinos and online, roulette wheels, blackjack tables, or other casino games. Sums lost from sports bets, horse racing wagers, lottery tickets, or scratch-off cards are also included.
Therefore, knowing when and how to write off gambling losses is paramount to avoiding the sting of bad beats.
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Conditions for Claiming Gambling Losses on Your Tax Return
There are some restrictions you should be aware of regarding gambling losses deduction.
You can write off gambling losses only when you report your winnings. Reporting includes itemizing your deductions on Schedule A (Form 1040). Schedule A is where you report all your gambling winnings and losses, including sports gambling taxes, and your taxes on casino winnings from casino for real money are documented.
Another condition is that your gambling losses can’t be more than the amount of your winnings. So, if you won $8,000 during the year but lost $10,000, you can only deduct up to $8,000. You must be able to provide proper documentation, such as casino receipts, tickets, bank statements, or a highlight of your gambling activity to verify your losses.
According to our casino guide section, it’s also crucial to know that you can only deduct gambling losses in the same year you incur them. You can’t extend gambling losses to future years. Let’s say a player had a significant loss in one year and no wins to offset it. Such a person can’t deduct that loss in a future year when there are no winnings to report.
How Can You Write Off Gambling Losses? Document Your Winnings and Losses
The IRS requires you to report all your winnings as “Other Income” on Form 1040, regardless of whether or not you have any gambling losses to offset the winnings. If you’ve received some gaming payments but not above $600, you might need to file additional forms, such as a W2G Form. Here are a few tips for maintaining accurate records of all your gambling activity throughout the year:
Journaling
Keep a journal of your gambling activity that includes the date, location, amount won or lost, and the type of gambling. You can utilize a gambling winnings tax calculator to aid you in the mathematical aspect.
Save Receipts and Digital Records
Keep all receipts, tickets, or other documentation of your gambling activity, including casino receipts, lottery tickets, sports betting slips, casino player’s club statements, or other records that show your gambling activity. If you gamble online, save the screenshots or printouts of your online gambling history.
Now, you may ask, how do I prove gambling losses on my taxes with all of these records?
Claiming Your Gambling Losses on Tax Return
Once you have all your documentation in order, the next step is to itemize your deductions on Schedule A. Report your gambling losses on Line 28 of the form under “Other Miscellaneous Deductions,” which includes losses from casino games. Be sure to include any documentation that supports your deductions. Finally, file your tax return electronically or by mail by the tax filing deadline (typically April 15th), and boom! You’re up for writing off your gambling losses on your gambling winnings tax.
Can You Write Off Gambling Losses in Special Cases?
There are some exceptional cases to consider when deducting gambling losses.
If you’re a professional gambler, since gambling is your primary source of income, you’ll need to report your income and losses on Schedule C as business income. You can deduct business expenses, including travel, lodging, and meals related to your gambling activity. However, note that you cannot deduct losses from illicit gambling activities. If you’re unsure about the legality of a particular gambling activity, consult with a legal or tax professional.
Gambling losses from social or informal games with friends, such as a friendly poker game or office football pool, are generally not deductible because they’re not considered “business activities.”
Get Clear With Uncle Sam
Can you write off gambling losses? Now, you know. However, the IRS can be pretty strict regarding gambling deductions. So, you must keep meticulous records of your losses and consult a tax professional if you have any questions or concerns. Visit Slots Paradise Casino to play real money-winning gambling games.
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