The IRS does not permit you to simply subtract your losses from your winnings and report your net profit or loss. And if you have a particularly unlucky year, you cannot just deduct your losses without reporting any winnings. If the IRS allowed this, then it's essentially subsidizing taxpayer gambling. The bottom line is that losing money at a casino or the race track does not by itself reduce your tax bill.
You need to first owe tax on winnings before a loss deduction is available. Therefore, at best, deducting your losses allows you to avoid paying tax on your winnings, but nothing more. Receive full access to our market insights, commentary, newsletters, breaking news alerts, and more. I agree to TheMaven's Terms and Policy. Keeping track of your winnings and losses The IRS requires you to keep a log of your winnings and losses as a prerequisite to deducting losses from your winnings.
In some cases, you'll get the W-2G on the spot. Otherwise, for this year's winnings, the payer must send the form to you by January 31, In any event, if your bet was with a casino, we're fairly certain you'll get the W-2G. But if your bet was just a friendly wager with a friend or you won an office pool … well, don't count on it. Special withholding rules apply for winnings from bingo, keno, slot machines and poker tournaments.
The amount withheld will be listed in Box 4 of the W-2G form you'll receive. You'll also have to sign the W-2G stating, under penalty of perjury, that the information listed on the form is correct. When you file your next year, include the amount withheld as federal income tax withheld. It will be subtracted from the tax you owe. You'll also have to attach the W-2G form to your return.
Again, this is what to expect when you plunk down a bet at a casino, racetrack, or with some other legally operated gaming business … don't expect your buddy or the guy in accounting who's running an office pool to withhold taxes although, technically, they should. Did you have a bad night at the blackjack table or pick the wrong horse to win? There's a silver lining if you lose a bet or two—your gambling losses might be deductible. Gambling losses include the actual cost of wagers plus related expenses, such as travel to and from a casino or other gambling establishment.
There are a couple of important catches, though. First, unless you're a professional gambler more on that in a second , you have to itemize in order to deduct gambling losses itemized deductions are claimed on Schedule A.
Since the tax reform law basically doubled the standard deduction, most people aren't going to itemize anymore. So if you claim the standard deduction, you're out of luck twice—once for losing your bet and once for not being able to deduct your gambling losses.
Second, you can't deduct gambling losses that are more than the winnings you report on your return. If you were totally down on your luck and had absolutely no gambling winnings for the year, you can't deduct any of your losses. If you're a professional gambler , you can deduct your losses as business expenses on Schedule C without having to itemize.
However, a note of caution: An activity only qualifies as a business if your primary purpose is to make a profit and you're continually and regularly involved in it. Sporadic activities or hobbies don't qualify as a business. Gambling winnings and losses must be reported separately. To help you keep track of how much you've won or lost over the course of a year, the IRS suggests keeping a diary or similar record of your gambling activities.
You should also keep other items as proof of gambling winnings and losses. For example, hold on to all W-2G forms, wagering tickets, canceled checks, credit records, bank withdrawals, and statements of actual winnings or payment slips provided by casinos, racetracks, or other gambling establishments.
The rules described on this page are for the majority of people with gambling income - those who are not professional gamblers. If gambling is your actual profession, then your gambling income is generally considered regular earned income and is taxed at your normal effective income tax rate. As a self-employed individual , you will need to report your income and expenses on Schedule C, which the eFile app will automatically generate and add to your Tax Return based on the information you enter.
You can deduct gambling losses as job expenses using Schedule C, not Schedule A. Again, the eFile. Nonresidents can usually report income that is "effectively connected" with a U. Gambling winnings, however, are considered to be "not effectively connected" and must generally be reported on Form NR. Nonresident aliens often cannot deduct gambling losses. However, there is a tax treaty between the United States and Canada that generally allows Canadian citizens to deduct their gambling losses, up to the amount of their gambling winnings.
If you have gambling winnings or losses, they must be reported on your tax return. We will prepare all the forms needed to report this on your return so you don't have to worry about which form you need. Get Your Tax Refund Date. What is DocuClix? Security About eFile. Where Is My Refund? How to Check Refund Status efile.
Mailing Addresses Contact eFile. Sign In Start Now. Join Taxesfaction! More eFiler Reviews. Why Choose eFile. TaxTalk With Tess.
0コメント