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• Can You Claim Gambling Losses On Your Taxes Australia
• Can You Write Off Gambling Losses On Your Taxes Owed

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IRS Summertime Tax Tip 2012-24, August 29, 2012

You can deduct wagering losses (for as much as you won) from your personal income taxes, but only if your wagering activities are considered a trade or business. For professional gambling, your gambling activity is considered a trade or business if it is: Pursued full time; In good faith; Done regularly; To produce income for a livelihood; Not. In fact, what you should do is deduct your losses only to the extent that you report your gambling winnings. For example, if you were to report you had won $5000 gambling but had losses of $20,000, this could cause a red flag. Also, only professional gamblers can write off the costs of meals, lodging and other expenses related to gambling.

• Whether you roll the dice, bet on the ponies, play cards or enjoy slot machines, you should know that as a casual gambler, your gambling winnings are fully taxable and must be reported on your income tax return. You can also deduct your gambling lossesbut only up to the extent of your winnings.
• The IRS requires you to keep a diary of your winnings and losses as a prerequisite to deducting losses from your winnings.

Whether you roll the dice, bet on the ponies, play cards or enjoy slot machines, you should know that as a casual gambler, your gambling winnings are fully taxable and must be reported on your income tax return. You can also deduct your gambling losses…but only up to the extent of your winnings.

Here are five important tips about gambling and taxes:

1. Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse races, and casinos. It includes cash winnings and the fair market value of prizes such as cars and trips.

If you receive a certain amount of gambling winnings or if you have any winnings that are subject to federal tax withholding, the payer is required to issue you a Form W-2G, Certain Gambling Winnings. The payer must give you a W-2G if you receive:

• $1,200 or more in gambling winnings from bingo or slot machines;

• $1,500 or more in proceeds (the amount of winnings minus the amount of the wager) from keno;

• More than $5,000 in winnings (reduced by the wager or buy-in) from a poker tournament;

• $600 or more in gambling winnings (except winnings from bingo, keno, slot machines, and poker tournaments) and the payout is at least 300 times the amount of the wager; or

• Any other gambling winnings subject to federal income tax withholding.

Generally, you report all gambling winnings on the “Other income” line of Form 1040, U.S. Federal Income Tax Return.

Can You Claim Gambling Losses On Your Taxes Australia

You can claim your gambling losses up to the amount of your winnings on Schedule A, Itemized Deductions, under ‘Other Miscellaneous Deductions.’ You must report the full amount of your winnings as income and claim your allowable losses separately. You cannot reduce your gambling winnings by your gambling losses and report the difference. Your records should also show your winnings separately from your losses.

Keep accurate records. If you are going to deduct gambling losses, you must have receipts, tickets, statements and documentation such as a diary or similar record of your losses and winnings. Refer to IRS Publication 529, Miscellaneous Deductions, for more details about the type of information you should write in your diary and what kinds of proof you should retain in your records.

For more information on gambling income and losses, see IRS Publication 529, Miscellaneous Deductions, or Publication 525, Taxable and Nontaxable Income, both available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Can You Write Off Gambling Losses On Your Taxes Owed

Page Last Reviewed or Updated: 31-May-2013