Dear Mark,
You said on slot winnings more than $1,200, the dreaded
IRS form must be completed. Having never won a jackpot
of this size before until recently at Stateline, NV,
I am confused. It took that much of my money to win
that jackpot. How can I offset the tax due on my win
with my losses? Lucille O.
You
can offset your gambling losses against your winning
jackpot on Schedule A as an Other Miscellaneous Deduction,
but only to the extent of your gambling win, not your
income from a 9-to-5 job. Gambling winnings are reported
on tax form 1040 on the Other Income Line. Reportable
gambling winnings include lotteries, bingo, raffles,
horse and dog racing and all casino games, legal or
otherwise. Yes, even an illegal bet on Denver in the
Superbowl
can be considered a
gaming win, or if you wagered on Atlanta, a deduction.
Also, Lucille, you must be able to substantiate
your losses with flawless documentation. How? By
supporting your losses with a descriptive gambling
diary. You do this by keeping track of all wagering
tickets, canceled checks, bank withdrawal statements
made at the casino and credit receipts as your proof.
Granted it is impractical to record every pull of
the handle, but by keeping a daily log of where
you played, how much you gambled and how much you
won or lost will be acceptable evidence for substantiating
your triumphs and tolls of gambling.
By the fact that you have never won a big jackpot
before, I infer that you probably did not keep factual
gambling records of your slot play. Don’t despair;
that is, if you use a slot club card. Most casinos
use some form of computerized tracking system similar
to the one called the SMART system (Slot Marketing
and Revenue Tracking System) that IGT provides the
casinos. With these Smart systems, the casino records
your detailed playing history. Because your play
is tracked electronically when using a slot club
card, the casino should be able to provide you with
the documentation needed to corroborate your losses.
One final thought, Lucille. Don’t just get
your recorded play at the casino where you hit it
big. Go back to the other casinos where you have
used a slot club card and ask for a printout of
all your play on their machines for that year. I
state “that year,” as gambling losses
can be used only to counterbalance gambling winnings
during that same tax period. They cannot be carried
forward or back to any other tax year.
