Gambling Losses Can Be a Deduction On An Income Tax Return

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Gambling Losses Can Be a Deduction On An Income Tax Return

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When claiming gambling losses on an income tax return, any income from gambling must be reported as well. The Internal Revenue Service has a strange way of thinking about gambling, it seems. This is evidenced by how they allow gambling losses to be deducted. The gambling losses can never be more than the gambling income. Seems like they have never gambled, but that is the rule. It seems that losing as much as gaining is acceptable. So, the gambling losses may be equivalent to the gambling earnings, but the loss can never exceed the earnings. The gambling records should show earnings separately from gambling losses.

In order to claim gambling losses on an income tax return, it is necessary to keep a precise diary of all gambling activities. The diary should track, in detail, the date of gambling activities and the type of wagering undertaken. The name and location of the gambling establishment should be noted as well, along with the names of others present at the gambling establishment during the time of the wagering. Of course, the most important statistics are the amounts won and lost.

There are even specific record keeping details for particular games, such as, keno, bingo, horse racing, lotteries, slot machines, and table games. Credit card and bank statement records can be used to provide documentation of gambling earnings and gambling losses. Documentation must also be kept in compliance with Internal Revenue Service forms W-2G and 5754, which deal exclusively with winnings from gambling.

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