Gambling losses are a well-documented tax deduction. They can be quite substantial for high-income earners who play games of chance frequently. However, it is not as simple as writing off the loss; you need to prove it with documentation if you want to reduce your adjusted gross income (AGI) and, by extension, your taxes.
There are two main types of documentation you will need to support your losses – third-party verification and detailed records. You must also have proof that you paid for the services or goods in question to deduct them on your taxes. These requirements are essential if you want to receive the full benefits of deducting gambling losses from your taxable income.
For advice on declaring your winnings please read “do casinos report winnings to the IRS?”
Third-party verification
As with all gambling-related deductions, you must provide third-party verification for any loss you claim during tax season. This means you need to get an official statement from a certified gambling expert, who will confirm the dates you played, what games you played, your winnings and losses, and other relevant information. The same applies if you are part of a syndicate.
If, however, you are playing alone and did not keep detailed records, you may be able to get verification from the casino floor manager where you play. When one is present during your entire session, he or she will be able to verify the information you need.
Keep in mind, though, that the casino representative may only be able to verify the amount of money you lost and won during a single session. This information may help you establish your losses, but you will need to provide a detailed record of your gambling activities as well.
Detailed records
Detailed records should outline the dates you played, the location, the game or games you played, the amount you spent on each game, and the amount you lost. You can use a notebook, computer file, spreadsheet, or any other type of record-keeping system that works best for you.
There are many apps designed to help you track your gambling losses. They can be very useful, but make sure you read the terms of service carefully and look for user reviews before downloading anything.
If you keep track of your gambling losses throughout the year, you can save yourself a lot of stress come tax time. This record will allow you to deduct the correct amount at tax return time, which will result in a lower tax liability and less stress during the filing process.
Keep receipts
A receipt is a written statement or copy of an itemized bill you have paid for goods or services. It shows that you have paid for something and is essential if you want to deduct gambling losses from your taxes.
Without receipts, you cannot claim gambling losses on your taxes. You may get away with it without receipts in some situations, such as if you are audited. However, you should not rely on this. Always keep receipts for everything related to your gambling activities, especially if you are playing at a casino.
Casino tickets and stickers
Casinos can often print out small paper stickers or tickets with your name on them when you play. These are used to track your winnings and losses across multiple games and sessions. If you are playing at a casino that uses such stickers, you can use the sticker to track your wins and losses.
You may also be able to print out a ticket with information on it that you can use to track your gambling activities. If you lose or misplace the sticker or ticket, you will not be able to claim your losses on your taxes.
Video recorded games
If you are playing a game with a cash prize in a casino, you can record the game and use the recording as documentation for your losses. This applies not only to slot machines but also to table games. You cannot, however, use a video recording of a free game or tournament as proof of your losses.
When you record a game, make sure you do so in a way that does not distract the people around you. Also, check with the casino floor manager to ensure that you are allowed to video record games at the facility. If you are, be sure to follow the casino’s rules and regulations to avoid being asked to stop recording.
Real-time game receipts
If you are playing a game that requires you to feed money into a machine by using a coin slide, you can use the receipt from the machine as documentation for your losses. These receipts are often printed out in real time when you make the transaction.
