Monday, February 8, 2010

Gambling winnings and Losses

Generally when you have gambling winnings you must report all winnings on page one of your tax return, then deduct your losses, not to exceed your gains, as an itemized deduction.

If you could just report the net winnings on page 1, it would reduce your adjusted gross income on page one of Form 1040 which is usually better than deducting it on page two as an itemized deduction--especially if you would be better off using the standard deduction if you didn't have the gambling loss deduction.

RS Chief Counsel has issued guidance recently that DOES allow netting of gains and losses for a casual gambler using the slot machines. This netting is allowed apparently on a daily basis only.

If you go to the IRS website, search for AM 2008-011 and you can read the document. Taxpayers must keep records and I stress that this netting is only for a specific fact pattern.

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