Not sure if this has been covered. If it has a link will do. And if it’s the wrong forum, please report it so a mod can move it. And if any of this is seen as illegal, please lock it. My intention is not to dodge taxes, I’ve already filed. I just want to know the machinations of gambling winnings/losses.
I know that if you win a cash prize over a certain threshold it’s automatically reported to the IRS. Vegas card games, lotteries, sweepstakes, etc. There is no getting around it, you fill out and sign the form before you see a dime of the winnings.
The question is, how do/can you report losses? If the IRS takes taxes for winnings, there must be a way to deduct for losses. For instance, in ND all non-reservation gaming is run by charities. So, in essence, if I lose $50 at the blackjack table, I’ve given to charity. (A legal deduction.) But because it’s a gaming table and I have a chance to win more than my stake, it seems unethical to take a deduction. Yet, if I win a shitload of money, the tax is taken out before I can collect.
Is there a special form to fill out? (I’m interested in Federal only as every state is different.) I assume a person would have to itemize. Would you need receipts?
Or is the deck stacked as I suspect so that you pay on winnings, but losses are, well, losses?
As I recall from my tax class many moons ago, you can only claim losses to the extent that they don’t exceed winnings. So, if you won $50 for the year, but lost $100, you can only claim the $50 loss (which translates to claiming $50 winnings as income). So yeah, you don’t get a break for losing the rent. I don’t know how this all ties into a charitable gambling establishment.
As a miscellaneous deduction on Line 27 of Schedule A–only if you itemize, and only up to the amount of your winnings.
Alas, no. You got something in return–the fun of the game and the chance to win–so gambling losses to a charity are not a charitable contribution. They can be a deduction, but only as above.
IANAAccountant, but I’m almost positive that losses in excess of winnings cannot be deducted- you can only deduct losses to offset winnings.
If you win $1000 one day and lose $500 the next, you can claim a $500 deduction against the $1000 winnings. If you win $1000 one day and lose $1500 the next, you can claim only a $1000 deduction against the $1000 winnings.
My Dad once won on an Atlantic City slot machine for $10,000. A year later I found a stack of old lottery tickets in a soup tureen in their kitchen cupboard. After taking the hit for the winnings, every year Dad saved old lottery tickets and stuff just in case he got lucky again and would have something to offset some of the tax.
Every January he’d throw it all out and start again. Never did have another big win, but hey you never know.
Since your dad probably didn’t win on his first drop of a coin, he could’ve deducted his losses on slot machines for the year, right? You don’t have to have a paper record of losses, do you?
Note that “Gambling wins & losses” is not a subject for amateurs on that 1040. Se a professional.
However, the above is basicily correct in a very simplified way. In many case, however- when you are playing one game for a long period- the smaller wins are netted against the losses. Thus, if you play the slots for 8 hours, hit a small jackpot for $500 but lose a net $200, none of that is ususually reported. Only wins that are large enough to trigger a 1099 are reported.
See a Tax professional if you have any significant winnings.
I know a couple of guys who were part of a lottery pool that won big. They each get $1500 a year. One of these guys goes around to lottery outlets and gathers other people’s losing tickets. At tax time, he writes them off as losses against his $1500. He can’t claim more than his win, of course.
Similarly, if you make money on the sale of one stock, and lose money on the sale of another, you can subtract the loss from the win. You can’t claim more loss than you won, though. Under some circumstances, you can stretch a loss over more than one tax year, but I don’t understand it well enough to explain it. Ask your accountant.
I see on a reread of my post that I wasn’t real clear. If you lose $1,500 and win $1,000, you can deduct $1,000 of the losses from the $1,000 winnings, but the remaining $500 can’t be deducted from your other income.
AskNott, the guy you know is committing tax fraud. Kinda risky of him to be telling others about it, but I guess it’s worth it to avoid $150-$579 of taxes per year on his windfall. I mean it’s only several years of prison time for each return he’s done this on. :rolleyes:
I did fall into this category one year; I hit a royal flush on a video poker machine, and was given a 1099-Misc form along with my cash. At the end of the year, the casino was happy to provide me with a profit & loss statement (based on their tracking through the use of my player’s club card) which I could use as documentation of offsetting losses for the IRS.