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Your Gambling Winnings, Losses and Taxes, Yes, I said Taxes

14 January 2011 by admin

January is half over and February is on its way, bringing Valentine’s Day and W-2 forms. And, yes, if you have been fortunate enough to have made some decent sized wins within the last year you do have to report it. But you can offset your taxes on your casino wins with your casino losses. No joke, you can.

In order to use your gambling losses to offset the taxes on your winnings there are certain things you have to track. This is careful record keeping. You cannot just write down how much you lost on a cocktail napkin and turn it over as proof that you lost money playing cards. Depending on which kind of casino game you are playing—and apparently losing at—there is specific information that you need in order to claim your losses on your tax return.

First, let’s take a look at slot machines. As some of you may know, if you win a jackpot of $1,200 or more the casino requires you to fill out a W-2G tax form. But this form has some other useful information for you to help you claim your losses that happened while you were playing to win that larger payout. That information is the number of the slot machine you were playing on. In addition to the slot machine’s number you must have all of your winnings of significant size (winning a quarter does not count). And of course you must track your losses—the significant ones! The IRS is not going to allow offsets that come from pennies.

And even though you get a W-2G form with a win of $1,200 or more, it is still best to keep your own records. You might have a night in which none of your individual wins surpass $1,200 so you would not receive a W-2G form. Having your own records helps when it comes time to fill out your tax forms

Then there are the table games. This would include your blackjack, poker, craps, roulette and baccarat tables and probably a few others I’m forgetting. Basically this category is for any casino game that is not a slot machine. Record keeping of wins and losses for table games is similar to the record keeping for slot machines; you of course need the table number of the table you played at and what table game it was. But the new thing you need to know that is different from slot machine record keeping is credit card data. You need to have recorded which of your cards you used, how much and whether the credit in the casino that gave you your chips was made in the pit or at the cashier’s cage. You of course need to record you decent sized wins and losses here as well.

And regardless of which type of casino game you are playing, be it the slots or a table game, you need the name of the casino. All of this information is necessary should the IRS wish to validate your claims. I have no doubt that they would be willing to tax your winnings, but offsets from gambling losses are more likely to be checked. We all know that the IRS hates to give up money they do not have to, and that is why your win and loss records are important in case the IRS comes a-callin’ to ask you where you played and how your losses accrued.

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