#1
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deducting losses
can someone explain the way the tax dedution works for gambling losses? i always hear you can't deduct more than your winnings, so does that mean if i lost 5K playing poker and won 4K, i can dedcut 1K from my tax return?
what documenatation do you need to show? also, what about the legal aspect of deducting losses from poker after the new anti-poker law? |
#2
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Re: deducting losses
I'm not a lawyer or an accountant. The only real answers will come from a tax professional. My understanding is that you can only deduct losses up to your winnings. So, if you win $1000 but you lose $500, you must declare the $1000 as Other Income and deduct the $500 under gambling losses. I'm pretty sure you can't deduct more losses than your wins.
I AM NOT A TAX PROFESSIONAL OF ANY KIND. What docs? All of them. You should have any losing tickets and casino issued win-related docs. If you played on a player's card, contact the casino for a statement of win/loss. You should document every poker session including the game type, stakes, table number (if known), date, time, win/loss, etc. As for legality, it's going to depend on where you live. Talk to your accountant or lawyer. |
#3
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Re: deducting losses
Above answer is very good and in line with what my accountant has told me. You will find more questions like yours in the legislation forum, but you probably won't find much more detail than above. Consult an accountant who knows how to deal with gambling winnings/losses. Although the rules are *relatively* straightforward, not all accountants are versed in them.
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#4
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Re: deducting losses
My dad is an accountant and I have recently asked him about this. We are Canadians though. My dad says that you could probably get away with having an overall loss for a year or two of gambling when you're starting out if you deem yourself a proffessional gambler. But after three years running losses they might tell you you can't keep writing it off and they may classify it as a leisure activity.
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#5
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Re: deducting losses
Your winnings are 4k so you could deduct up to 4k.
Link to how to keep track of sessions. The recent anti-internet gambling law doesn't make playing poker online illegal. |
#6
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Re: deducting losses
[ QUOTE ]
The recent anti-internet gambling law doesn't make playing poker online illegal. [/ QUOTE ] There are some local jurisdictions where it is illegal. |
#7
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Re: deducting losses
[ QUOTE ]
[ QUOTE ] The recent anti-internet gambling law doesn't make playing poker online illegal. [/ QUOTE ] There are some local jurisdictions where it is illegal. [/ QUOTE ] NIT: If I understand the law correctly, the "recent law" which is often referred to (UIGEA) has not changed where it is legal to play or not. In other words, in the states where it was illegal it still is, the UIGEA has not made it so. As this relates to OP though, the tax forms do not ask *how* you got your gambling winnings; they could just as likely be from live home games, which are legal in most states. |
#8
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Re: deducting losses
Right, UIGEA has nothing to do with legality of online poker in the US. I'm referring to state regulation such as with Washington state.
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#9
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Re: deducting losses
[ QUOTE ]
Your winnings are 4k so you could deduct up to 4k. [/ QUOTE ] so you are saying you would be declaring 4k in winnings and 4k in losses. so the best they can do is offset the winnings? if that's true though, then i wouldn't even bother mentioning gambling at all if i had a loss of 1k for the year. |
#10
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Re: deducting losses
Yes, there would be no reason to mention it. There would actually be no where for you to mention it. If you try to deduct it, you're going to get a friendly letter from the IRS, I would imagine.
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