Gambling Losses

Ten Forty + Quality Tax Preparation & Financial Services 281-397-7777 Fax 281-397-7443 Tax Tips Hitting the jackpot on gambling losses Gambling may not be for everyone but many people occasionally place wagers at the track or indulge in games of chance. You may be one of them. If you're lucky enough to hit a jackpot, or even if you have relatively modest winnings, the IRS expects you to report those amounts as taxable income. On the other hand, you can reduce the tax on those winnings with deductible losses from your other gambling activities. Perhaps one of the best benefits of this tax deduction is that it can be claimed without meeting the usual tax law requirements for similar miscellaneous expenses. The winning thresholds that require reporting vary by gambling activity, but generally, if you receive $600 or more from gambling activities during the year, you must report the income on your annual tax return. This includes winnings from trips to the casino and racetrack and even the bingo games at your local house of worship. It doesn't matter if the money goes to a private business or a charity. Fortunately, you can offset the tax by claiming gambling losses, up to the amount of your winnings. But you can't claim any loss for the excess. You are strictly limited by this rule. Now here's the kicker: Normally, you can deduct only miscellaneous expenses above 2 percent of your adjusted gross income (AGI). But this doesn't apply to gambling losses. Therefore, your losses are fully deductible down to the penny! It's important to keep track of your losses through detailed records. For instance, if you bet at the track, log your wagers for each race and supplement it with documentation like losing ticket stubs. Similarly, if you're playing blackjack at a casino, list the amounts won and lost at each table. Bingo players should record the number of games played, the cost of cards, and amounts collected on winning cards. If your activities rise to the level of being a "professional" gambler, you can deduct all of your losses, even if they exceed your winnings. Give our office a call if you have questions about your situation. 2016 Tax Extension Deadlines are approaching. Go to www.tenfortyplus.com and complete your online organizer (under forms and documents). Make your appointment using our online appointment system. Call 281-397-7777 and get a user id with password set up so you can send us all your information through our online secure portal and do your taxes from the comfort of your home or office or come see us at our office. 1040 + Quality Tax Preparation & Financial Services Joseph C Becker EA www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com Contact Us There are many events that occur during the year that can affect your tax situation. Preparation of your tax return involves summarizing transactions and events that occurred during the prior year. In most situations, treatment is firmly established at the time the transaction occurs. However, negative tax effects can be avoided by proper planning. Please contact us in advance if you have questions about the tax effects of a transaction or event, including the following: • Pension or IRA distributions. • Retirement. • Significant change in income or • Notice from IRS or other deductions. Revenue department. • Job change. • Divorce or separation. • Marriage. • Self-employment. • Attainment of age 59½ or 70½. • Charitable contributions • Sale or purchase of a business property in excess of $5,000. • Sale or purchase of a residence or other real estate.