If you gamble, you need to know that lawmakers have stacked the tax-law deck against you.
Four basic rules to know about gambling:
Win or lose, you need tax records.
Legal or illegal, you need tax records.
Gaming establishments must report certain winnings of $600 or more on a Form W-2G to both you and the IRS.
You must report your gambling income and losses in your tax returns.
The big picture works like this: If your winnings exceed your losses, you pay taxes on your winnings. If your losses exceed your winnings, you get no deductions for your losses. Further, the losses do not carry forward. The losses simply disappear, lost forever.
And things can get worse. If you are a recreational gambler, you report the winnings separately above the line and losses separately below the line as itemized deductions.
If you don’t have the right records to prove your gambling, things can get downright miserable. You could get taxed on your winnings and receive no benefit from your losses.
The bottom line. You need records of your gambling. See the sidebar at the end of this article for how to keep the right records.
This article gives you what you need to know about the tax side of your gambling. You need this information, whether you ... Log in to view full article.