This Daily Tax Tip Spotify Podcast and/or WordPress Blog Post understands you have engaged in numerous Gambling Transactions and are concerned with the tax reporting of your Wins and Losses.
Assuming you are a Recreational Gambler (i.e., you are not in the trade or business of being a Professional Gambler), you are required to report the full amount of your gambling winnings (with no reduction for gambling losses) for the year as income on Form 1040, and then deduct your gambling losses (up to the amount reported as Gambling Winnings) for the year separately on Schedule A, Itemized Deductions, as a miscellaneous itemized deduction.
Such gambling losses are not subject to the 2 percent of adjusted gross income floor to which many other miscellaneous itemized deductions are subject. If you are filing a joint return for the tax year, you and your spouse’s combined gambling losses are deductible to the extent of your combined winnings. Gambling Losses in excess of Winnings are Not Deductible.
On the other hand, if you qualify as a Professional Gambler, you can deduct your gambling losses up to the amount reported as gambling winnings as an Above the Line Deduction in arriving at adjusted gross income, rather than as an itemized deduction.
For tax years before 2018 and after 2025, you can also deduct expenses incurred to engage in the trade or business of gambling (e.g., telephone and internet charges, automobile expenses, ATM fees, etc.). For Tax Years 2018-2025, such expenses are included in gambling losses and cannot be deducted if they exceed gambling winnings.
In order To Deduct Your Losses and Business Expenses, you must keep an Accurate Record of Your Winnings, Losses, and Expenses. You should maintain Accurate Records which contains at least the following:
(1) The date and type of the Specific Wager or Wagering Activity;
(2) The name and address or location of the Gambling Establishment;
(3) The Names of Other People Present with you at the gambling establishment; and
(4) The Amounts Won or Lost.
You should also have other documentation. For Example; Don Fitch, CPA recommends using today’s technology with a video camera app from your iPhone or like kind product. This video camera app would have a date and timestamp function. In other words, you simply video record all of your gambling with date and timestamp. There is nothing better!
Also, you can generally prove your winnings and losses through Form W-2G Certain Gambling Winnings; Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment.
For Specific Wagering Transactions, you can use the following items to support your winnings and losses:
(1) Keno: Copies of the Keno Tickets you purchased that were validated by the gambling establishment, copies of your casino credit records, and copies of your casino check-cashing records.
(2) Slot machines: A record of the Slot Machine Number and all winnings by date and time the machine was played.
(3) Table Games (twenty-one (blackjack), craps, poker, baccarat, roulette, wheel of fortune, etc.): The number of the table at which you were playing and casino credit card data indicating whether a credit was issued in the pit or at the cashier’s cage.
(4) Bingo: A record of the number of games played, cost of tickets purchased, and amounts collected on winning tickets. Supplemental records include any receipts from the casino, parlor, etc.
(5) Horse Racing, dog, etc: A record of the races, amounts of wagers, amounts collected on winning tickets, and amounts lost on losing tickets. Supplemental records include unredeemed tickets and Payment Records from the Racetrack.
(6) Lotteries: A record of Lottery Ticket Purchases, dates, winnings, and losses. Supplemental records include unredeemed tickets, payment slips, and winnings statements.
(7) Sports Gambling including Football, Baseball, Soccer, and Basketball (not all inclusive): A record of Ticket Purchases, dates, winnings, and losses. Supplemental records include unredeemed tickets, payment slips, and winnings statements.
Please contact the office of Don Fitch Accountancy at (760)567-3110 or Email Don.Fitch@CPA.com if you have any questions or would like additional information.
DON FITCH, CPA
74478 Highway 111 #3
Palm Desert, CA 92260
Toll Free: (877)CPA-Help or (877)272-4357
P.S. My firm is based upon referrals. Please feel free to refer my firm to anyone you know that is looking for a new CPA and/or tax preparer. Thank you in advance.
(Updated 06032021-1 320-770)