New Tax Rules for Gamblers? You Bet
Technically speaking, an amateur gambler must report the full amount of each and every win on the miscellaneous income line on page 1 of Form 1040. So in a profitable year, you cannot simply subtract losses from winnings and report the net amount of winnings on page 1 of Form 1040. But let’s face it: Even folks who attempt to keep good records will probably only record their daily net winnings and daily net losses. Reporting an amount of gross income equal to the sum total of the net winnings from all days you had net winnings on page 1 of Form 1040 will probably keep you out of trouble with the IRS (assuming the amount reported as income equals or exceeds the sum total of any amounts reported as income on Forms W-2G).
Whether you are an amateur or a professional gambler, you must adequately document the amount of your losses in order to claim your rightful gambling-loss deductions. According to the IRS, taxpayers must compile the following information in a log or similar record.
* The date and type of each specific wager or wagering activity.
* The name and address or location of the gambling establishment.
* The names of other persons (if any) present with the taxpayer at the gambling establishment (obviously it’s more difficult to meet this requirement at a public venue such as a casino or race track).
* The amount won or lost. Substantiation of winnings and losses from wagering on table games can done by recording the number of the table played and keeping statements showing casino credit issued to the player. See also IRS Publication 529 (Miscellaneous Deductions).