when filing federal taxes, how do you claim gambling loses?

Question

i understand that you are allowed to claim only as much in loses as you have declared in winnings, how do you prove the loses?

Answer 1

One may be able to deduct their gambling losses on line 27 of the schedule A under other miscellaneous deductions. Obviously, one must be able to itemize in order to justify using the schedule A. The IRS suggests that one who regularly gambles to keep a diary that tracks their gambling activity. They suggest the diary include:

1. The date and type of your specific wager or wagering activity.
2. The name and address or location of the gambling establishment.
3. The names of other persons present with you at the gambling establishment.
4. The amount(s) you won or lost.

"In addition to your diary, you should also have other documentation. You can generally prove your winnings and losses through Form W-2G, Certain Gambling Winnings, Form 5754, Statement by Person(s) Receiving Gambling Winnings, wagering tickets, canceled checks, substitute checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided to you by the gambling establishment."

The above was taken verbatim from IRS Publication 529 on miscellaneous deductions which is linked below. They offer other suggestions depending on the type of gambling activity that one engages in.

One need not attach anything supporting their gambling losses to their tax return. They should just keep it in their records in the event they are randomly selected by the IRS for an audit and asked to support their deductions.

Answer 2

Gambling loses are reported on line 27 of Schedule A. They are not subject to to the 2% limitation but you must itemize. You must have a very clear record of what your loses and winnings are. Many of my clients use the casino's player cards and ask the casion for a print out at the end of the year. I have another client who starts every trip to the casino with a stop at the ATM in the casino and records how much she has at the end of the day. That has not been tested but for those that are not talking about a large sum of money that may work. Of course the best way of avoiding gambling tax is to nerver play or at least never win.

Answer 3

There are very specific rules on the records you need to have of ALL of your gambling activity for the year to claim gambling losses. You must keep a diary through the year of your gambling activity, showing winnings and losses. See http://www.irs.gov/pub/irs-pdf/p529.pdf page 12. Just having, for example, a box full of losing lottery tickets isn't sufficient for a deduction.

You are required to report ALL of your gambling winnings as income, not just the ones you get a W-2G for.

You can only claim gambling losses if you itemize. You must claim winnings whether you itemize or not.