The basics of the            gambling tax laws
 

• Gambling winnings are taxed by both the IRS and by many states.
• All winnings from all forms of gambling are taxable, and must declared as income on your tax return.
• All losses from all forms of gambling are deductible as an itemized deduction for recreational players, limited to the amount of winnings declared.
• Professional Gamblers should file as a self-employed business using a Schedule C.
• The value of "comps" received are considered to be gaming winnings and should be included in your total winnings. This does allow you to deduct gaming losses to offset the income from the "comps".
• Wins and losses are reported only in the year they occur. Excess losses cannot be carried forward or back to offset winnings in other years.
• Married couples filing a joint return must combine their winnings and combine their losses and report only one figure for each. 
• The IRS has issued instructions that "lumping" is unacceptable. "Lumping" is the practice of reporting of one net win figure and no losses or reporting nothing if your net from gambling is a loss. You must report your total of your winning sessions separately from the total of your losing sessions.
• The IRS requires that an accurate diary or similar record must be maintained for substantiating your wins and losses, and that the diary should contain at least the following informatioThe date and type of your specific wager
  -The name of the gaming establishment
  -The address or location  of the gaming establishment
  -The names of other person(s) (if any) present with you at the gaming establishment
  -The amount(s) you won or lost
• The IRS also requires that in order to substantiate your diary, supplemental records are required, including the following (these records are not to be submitted with your return but will be needed should you be audited):
  -W-2G's
  -Wagering tickets or receipts
  -Canceled checks
  -Credit card records such as cash advances
  -Bank withdrawals
  -Any receipts provided by the gambling establishment
• The IRS form W-2G is issued to players and is also sent to the IRS by the Casino for certain gambling winnings as follows:
  -Winnings of $600 or more from state lotteries and other wagering transactions, in which the winnings are at least the amount of the wager
  -Winnings of $1,200 or more from bingo and slot machines
  -Winnings of $1,500 or more from keno, less the amount of the tickets bought on the winning game
  -Winnings of $600 or more from horse racing, dog racing or jai alai, if the winnings are at least 300 times the wager
• W-2G's are not required for winnings from table games such as blackjack, craps, pai gow, baccarat and roulette, regardless of the amount.
• Casinos and card rooms are subject to the "money laundering rules," and must report aggregate cash transactions of $10,000 or more to the IRS in any one day. They also can make out such a report for amounts as low as $2,000, if they are suspicious. Once a casino has your SSN and ID on record, they can issue these Cash Transaction Reports (CTRs) without your knowledge.

÷By Yolanda-Smulik Roche, E.A. and Roger C. Roche, E.A.