Income taxes and gambling losses
Living here in Las Vegas, you may spend at least some of your time at the casinos. You relish your winnings, but more than likely, you also lose from time to time. You know that the IRS wants a share of your winnings if they are over a certain amount, but did you know that you may also be able to deduct your losses?
Of course, this requires full transparency on your part when it comes to your winnings because the IRS only allows you to deduct losses of no more than what you declare as winnings.
Keeping a diary
Part of the requirement for deducting gambling losses is keeping a diary of how much you win and how much you lose. That’s not all, however. You must also include the following information in your diary:
- Name and address of the gambling establishment
- People you were with
- The date and type of gambling
The types of gambling winnings and losses you must keep track of include the following:
- Sports betting
- Poker games
- Casino games
- Dog and horse races
You must also keep all wagering tickets, credit records, cancelled checks and receipts from the gambling establishment, along with the relevant IRS forms.
There are limitations, of course
The IRS does not allow you to deduct any losses over the amount of your winnings in the current tax year or in future tax years. Oh, and you can only deduct your losses when you itemize. If your deductions do not exceed the standard deduction, you cannot deduct gambling losses.
In addition, the IRS does not allow the deduction of gambling losses without you reporting any winnings as income. At best, all you can hope for is not to have to pay taxes on the amount you won during the course of the year.
The IRS doesn’t make it easy to deduct the losses you sustain from gambling. The reporting requirements are quite specific, and failing to include all of the mandatory information could mean that you can’t deduct your losses. If you tend to win and lose thousands of dollars each year, you may benefit from working with a tax attorney here in Las Vegas.
No one likes to pay more taxes than absolutely necessary. If gambling is part of your reason for living here, and you have your good days and bad days, you will more than likely need to deal with the IRS at some point. Fortunately, you don’t have to do it alone.