Gambling and taxes: How are income and losses handled?
Gambling always has an outcome. Sometimes you win, sometimes you lose.
But either way, there are tax implications.
How do gambling income and gambling losses affect taxes? In this post, we will discuss that question as it applies to casual (not professional) gamblers.
Reporting income, deducing losses
If you suffer gambling losses, you can deduct those losses on Schedule A, for your itemized deductions.
Keep in mind, however, that the
What does that mean exactly regarding the deductibility of losses? For example, say you won $1,200 at a casino but lost $1,500. In that case, you could deduct $1,200 – but only if you had enough other deductions in order to itemize.
Audits
If an audit arises, the IRS can be strict about the amount of your gambling income and making you prove all of your gambling losses. If you win money, you may receive a Form W-2G from the payer.
If your winnings were a jackpot at a Las Vegas casino, you can be sure that the casino will be reporting those winnings to the IRS. So it is important to report winnings accurately on your tax return. And if are deducting gambling losses, you have to be prepared to verify them in case of an audit.
This means you should try to
Tax debt and gambling issues
Gambling losses can also affect your ability to address any problems you have with tax debt. If you are in that position, it makes sense to get help from a skilled attorney who can guide you in
