A Great Piece of Gambling Tax Advice

October 16, 2013 Posted in Strategy by No Comments

The Reno Gazette Journal has a little piece on gambling taxes that some of you gamblers might find useful. Here in the US, tax law requires you to report and pay taxes on all gambling winnings. Most gamblers are aware of this, but there’s a little something you might want to know about gambling losses.

Basically, you can use your gambling losses to offset your gambling wins when tax season comes around. This can significantly lower your tax burden. The key to deducting your losses is to keep the best records possible. If you are ever audited by the IRS, the burden of proof will fall on you. You have to prove that your gambling losses are legitimate and actually happened.

According the news article, you should keep a detailed gambling diary. Note every session, the table at which you played, the date, the amount won or lost and any other details that help corroborate your story. It also helps to keep things like ATM receipts, airline tickets and losing bet tickets.

See the whole story here for more details and hints.

The article is written from a brick-and-mortar point of view, but the advice could also be put to good use at online gambling sites. It may be tempting to not report winnings earned at online casinos, but that’s a big gamble. If you are ever audited, that unreported income will stick out like a sore thumb.

When you gamble online, it is recommended to keep a record of every session. That might sound like a pain, but it’s better than sweating through an audit knowing that you have quite a bit of unreported income. Set up an excel spreadsheet and get into the habit of logging dates and details.

Some online casinos have a “bet history” feature that will let you see the details of your past gambling sessions on that website. See if your favorite casino has such a feature and use it to make your life easier.

The best thing you can do, however, is talk to a CPA. I’m not a tax professional so my advice can only take you so far. Do what I do and find a skilled CPA. A good CPA will walk you through everything you need to properly declare your gambling wins and losses.

Taxes aren’t much fun for any of us, but there’s no way around it. Uncle Sam wants his cut and it’s best to just get it over with and plan ahead for tax season. The good news is that if you find yourself paying a significant amount of taxes, it means you’re doing something right.