Gambling
winnings are reported on tax form 1040 on the
Other Income Line. Reportable gambling winnings
can come from lotteries, bingo, raffles, horse
and dog racing, online poker, casino games, and
slot tournament wins. Luckily, Sandra, you can
offset the taxes by reporting your losses if you
keep impeccable records.
As
a loss-claimant, you must substantiate your loss
claims with a flawlessly documented, descriptive
gambling diary. For starters, your gambling diary
should have date and type of gambling event, name
and location of casino, poker room, racetrack,
etc., table or slot machine number where the gambling
took place and total dollar amount lost. You are
also permitted to use airline tickets, bank withdrawal
statements made at the casino, canceled checks,
credit-card cash advances, bona fide (see below)
losing betting stubs, and yearly statements of
your wins and losses from the casino as additional
collaboration.
Also,
Sandra, you can only offset your wins by loses
if you itemize rather than take the standard deduction
on your tax return. 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.
Remember,
Sandra, the burden of proof falls on your shoulders,
so the better your records, the better your chances
of surviving an audit. And don’t emulate
a misinformed friend of mine who went dumpster-diving
at the racetrack to collect over $10,000 worth
of losing tickets over one weekend, and then tried
to peddle them off as his own personal loses.
The IRS caught a strong whiff of that horse manure,
and his legal fees ended up far outweighing his
tax liability, penalties and interest.
Final
caveat: Being that this subject matter is well
above my pay grade, I would still recommend that
you consult your CPA or accountant to get the
current tax code changes regarding gambling and
taxation.
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Columns By Mark Pilarski
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