Gambling Winnings

2008-11-24 by

Today TaxMama hears from Ken in Las Vegas with this dilemma. “Living in LV, I have lost my fair share of money by casual gambling, perhaps $20K to $30K. I have only won “big” a few times, when they give you that IRS form. Problem is, those little forms never make it home, but they do get reported. Is there a way that I can tie this all together, and get a deduction for all the losses?”

Dear Ken,

If you’re losing between $20 and $30,000 per year, has it occurred to you that you might have a problem? You may want to have a chat with the good folks at http://www.gamblersanonymous.org .

More of an indication that you have a problem is that those little forms never make it home. That really shows you’re not paying attention. Please, consider taking up a new hobby.

Meanwhile, to reconstruct the information IRS has already received about your winnings, you have two options:

1) Contact each casino and ask them to give you a copy. If you remember where you won money.

Better yet, option 2: Put your tax return on extension in April and wait another month.
Then send IRS Form 4506-T, and check the box for line 8.
http://www.irs.gov/pub/irs-pdf/f4506t.pdf

Enter 12/31/2008 on line 9, and any other years you think you overlooked reporting winnings. You should get the report in about two weeks. There is no charge for these transcripts.

As to the losses, you need records. William Perez, About.com’s Tax Guide has some pretty good information about how to keep records (or reconstruct them) on your losses:
http://taxes.about.com/b/2006/04/05/keeping-track-of-gambling-losses.htm

Also, while gambling winnings are reported on the front of your Form 1040, gambling losses are itemized deductions. You will need to file a Schedule A to report your losses. That means you may not get the full benefit of the losses you can prove, if you don’t normally itemize. Read more about how this works in IRS Publication 529 and Publication 17.
http://www.irs.gov/publications/p529/ar02.html#d0e2106
http://www.irs.gov/publications/p17/ch28.html

It’s time to listen to Kenny Rogers – Know when to walk away…

And remember, you can find answers to all kinds of questions about gambling income and other tax issues, free. Where? Where else? At TaxMama.com

Download the MP3 (0:00min, 1MB) or listen now...

Ask TaxMama
Where taxes are fun and answers are free
www.TaxQuips.com
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GamblersAnonymous.org
IRS Form 4506-T
To get free Transcript of winning reports from Casinos
William Perez, About.com's Tax Guide
Keeping loss records for gamblers
IRS Publication 529
Gambling income and losses
IRS Publication 17
Reporting gambling losses as itemized deductions


All Comments RSS

  1. Suzanne Metzger CPA Says:

    And here's another scenario where a tax professional can get it done in 24-48 hours if the taxpayer just wants a chance to get it done and over. I have had great luck with a taxpayer in my office and two or three calls – one to the Practitioner Priority Service to get the transcripts faxed to me and the other to the casino's accounting department for a copy of the frequent player card tracking. I don't know if $20-$30K constitutes a problem – depends on the years it took to do this damage. I know many LV residents that can vouch for those amounts over a few years. Remember, someone has to pay for the lights!

  2. Lion Says:

    Your tax professional can get your information in mere moments using e-Services

  3. Eva Rosenberg - Your TaxMama® Says:

    Yes, my friends. A tax professional can get you the information in minutes.

    BUT! But, not before the information is online. Now that IRS has established a filind deadline of March 31st to those who e-file, the information is often not viewable until May.

    Once it IS up, your tax pro can access the information in minutes, with your signed power of attorney, either through their e-services account or through the Practitioner's Hotline (PPS).

    Have fun!

    Eva

  4. Kris Says:

    At the casinos around here (KY and IN), they are kind enough to give out transcripts of machines, length of time played, date and dollar value inserted for the customer when requested. This information is gathered from the player's card that was used, and I am assuming with the wins and losses talked about, that there was a card?


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