01 Sep It’s OK to Gamble This Way?
Most people gamble periodically.
Rule 1- Your Winnings are taxable. Your income from gambling is taxable, and is reported to the IRS on Form W-2G.
Rule 2- Keep records of your losses. You are allowed to offset your gambling winnings with your gambling losses-however, the IRS and tax court expects you to maintain a ” contemporaneous gambling diary”. That means a detailed record —for example, to document your slot machine losses, its recommended that you record the machine number, date, and time played.
Rule 3- You cannot claim net gambling losses. If your gambling losses exceed your winnings, there is no resulting tax deduction-it simply disappears. For example, let’s say you won $15000 at the casino, but over the entire year lost $20,000; the net loss of $5000, for tax purposes disappears.
So, if you’re gambling and do not want any surprises when you file your tax return, please remember these 3 rules.