Since you must report gambling winnings separately from the deduction for gambling losses, you should record them in separate places in your log book to make it easier to summarize at year end. Include any taxes withheld on your winnings, as shown in Box 2 of Form W-2G, in your total tax payments section of your tax return Form 1040. In order to claim gambling losses, you must itemize your deductions on Schedule A and file your federal income tax return on Form 1040. You then would make two separate entries, with winnings on Form 1040 and losses on Schedule A. Same Old Story: Without Diary, Gambling Loss Disallowed April 1st, 2012 taxdood Leave a comment Go to comments Some taxpayers seem to believe that a casino’s statement is sufficient to substantiate a taxpayer’s reported gambling winnings and losses.

DEFINITION of Gambling Loss

A gambling loss is a loss resulting from games of chance or wagers on events with uncertain outcomes (gambling). These losses can only be claimed against gambling income.

BREAKING DOWN Gambling Loss

The Internal Revenue Service (IRS) views gambling wins as income, and therefore requires people to pay tax on the winnings. It allows people to deduct their gambling losses if they itemize their deductions. The IRS also requires taxpayers to keep a diary of winnings and losses in order to deduct losses. Winnings or losses can be from the following gambling activities: lotteries, raffles, dog races, horse races, casino games, poker games and sports events. Taxpayer notes must include the date and type of gambling, the name and address of the gambling venue, the people that the taxpayer gambled with if applicable, and the amounts won and lost.

Gambling losses that are deducted cannot exceed the winnings reported as income. So if a gambler has $3,000 in winnings but $7,000 in losses, he or she can only deduct $3,000. The remaining $4,000 cannot be written off or carried forward to future years. If a gambler has $3,000 in winnings and $1,000 in losses, he or she can report the $3,000 as income and then claim the $1,000 as an itemized deduction.

The Effects of Gambling Loss

Can Gambling Losses Be Deductible

Large gambling losses are stressful and can trigger or exacerbate a gambling addiction. For example, a person can win $10,000 at Casino A one night and lose $9,000 at Casino B the next night. Despite the leftover $1,000, that gambler is sent home the first night with a W-2 for the $10,000 from Casino A and must still pay taxes on that income.

2018 Gambling Losses

Gambling loss can not only have psychological and financial effects, but it can lead to other destructive behaviors. Crippling gambling loss or debt can lead to embezzlements, writing bad checks and committing other crimes in order to cover a gambler’s losses. Gambling can be a serious addiction and affect a person’s family life and career in many negative ways.

How To Make Up Gambling Losses