When
you receive a W-2G for gambling winnings, you are allowed to deduct your losses
up to the amount of your winnings. But
you must be able to prove your losses with some form of documentation.
In
a recent Tax Court case (Rios, TC. 2012-1128) the taxpayer was not allowed to
use his gambling losses to offset his winnings.
The Tax Court stated that it was obvious that he had losses, but his
documentation was so incomplete that the court was unable to come up with a
reasonable estimate of his losses.
Accordingly, he was not allowed any deduction and 100 percent of his
winnings were taxable.
The
taxpayer could have proven his losses if he had kept a daily log of bets
placed. Another method is to sign up to
the players’ clubs that many casinos offer.
When you use your players’ card, the casino's computer keeps track of
all your bets. You can then get a
printout from them as backup for your losses.
Like any good CPA, I need to add a disclaimer: Unfortunately, it is impossible to offer
comprehensive tax info over the Internet, no matter how well-researched or
written. And remember, I love my
readers, but having me bookmarked on your computer doesn’t make you a
client: Before relying on any
information given on this site, contact a tax professional to discuss your
particular situation.