Can gambling losses be deducted on a tax return?
What are the rules for deducting gambling losses and what receipts or documents do I need to support any losses? Also, what out of pocket expenses can I deduct? I am only interested in the rules for Texas Hold 'em losses! Thanks.
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Jun 27, 2014
The tax rule is your gambling losses are limited to your gambling winnings. Your winnings are treated as income and your losses are treated as an itemized deduction. These two amounts only net to zero if you itemize your expenses. Any excess gambling losses for the year are not deductible. Assuming you are an amateur gambler, you cannot deduct any out-of-pocket expenses related to gambling (such as transportation costs, meals, lodging, etc.).
Some taxpayers argue that they are professional gamblers (see Commissioner v. Groetzinger, 480 U.S. 23 (1987)). If they meet certain requirements, which are beyond the scope of this answer, their gambling business would be treated similar to any other business activity with one significant exception. The exception is your gambling losses are subject to a “losses-cannot-exceed-gambling winnings” limitation (See George E. Tschetschot, TC Memo 2007-38 at http://ustaxcourt.gov/InOpHistoric/Tschetschot.TCM.WPD.pdf ; see also http://ustaxcourt.gov/InOpHistoric/LakhaniDiv.Halpern.TC.WPD.pdf), though as a professional gambler they could deduct out-of-pocket non-wagering expenses (IRS Office of Chief Counsel Memorandum EMISC 2008-013; Ronald A. Mayo, 136 TC 81 (2011); Action on Decision (AOD) 2011-06]. This could be considered good news in years when your gambling losses exceed gambling winnings, as your other “out-of-pocket” expenses will result in a loss that can be used to offset income from other sources in your tax return.
Under IRC Section 6001, taxpayers must keep records necessary to verify items reported on their tax returns. Per Rev. Proc. 77-29 provides guidance as to acceptable evidence for substantiating gambling activity. This procedure states that taxpayers should compile the following information in a log, record book or diary: the date and type of each specific gambling; the name and address or location of the gambling establishment; and the amount won or lost from wagering on table games, the people you gamble with (if possible) etc. This amount won or lost could be recorded by showing the number of the table played, keeping statements and receipts showing casino credit issued, such as the amount of chips purchased and cashed in each gambling session (See IRS Publication 529) though this method has not yet been tested by the courts. Additional supporting evidence could include affidavits or testimony from gambling management or other gambling professionals regarding your wagering activity.
In Chief Counsel Advice (CCA) 2008-011 (http://www.irs.gov/pub/irs-utl/am2008011.pdf), the IRS stated it was permissible for a casual slot player to simply keep a record of his net win or loss amount for each gambling session. It would seem this concept of recording all the net wins and losses from all the taxpayer's gambling sessions may also be considered sufficient record keeping for other forms of casual gambling and for professional gamblers as well. In a 2009 decision, the Tax Court appeared to endorse the above mentioned approach to recording gambling wins and losses. (George Shollenberger, TC Memo 2009-306.). Also in very rare circumstances no record keeping may be allowed. In a 2009 Summary Opinion, the Tax Court allowed a taxpayer to use a common-sense approach to establish that his gambling losses, for which he had no records, were more than enough to offset his gambling winnings, as reported on Forms W-2G (Jose D. Caro, TC Summary Opinion 2009-184.)
Jun 27, 2014
https://turbotax.intuit.com/tax-tools/tax-tips/Taxes-101/Can-You-Claim-Gambling-Losses-on-Your-Taxes-/INF14370.html
Jul 2, 2014
The two points to keep in mind are (1) whether one in a professional gambler or was this a one time recreational event. The second point is as James pointed out is good record keeping.
Jul 5, 2014
The answers below are perfect. If you are a professional gambler you must treat your gambling like a business. Recording all profit and losses and expenditures with detailed information including receipts.
Aug 30, 2014
It all depends on your level. If you are playing professionally - then you must keep the declaration. If you're a fan and just sometimes win or lose, you should not. Here you have an online casino with the very best bonuses http://www.keytocasino.com
Jun 26, 2015
It all depend on your level. If you professional gambler you must treat your gambling like a business. your winning are treated as income and your losses are treated as an itemized deduction.
Nov 30, 2020
This is a very individual thing. I think it is important to understand that this is a job or a pleasant pastime. I only use verified greatcasinocanada sites and have not experienced any problems so far. But I do not know how it happens with you.