It’s that time of year where tax questions flow in (although we get tax questions throughout the year, just more when it’s top of mind for players). Here’s a couple of recent examples:
How do you handle the IRS. Is a win loss statement all you need for taxes? You are able to deduct losses from your wins. So you don’t owe taxes.Barbara
Can you please explain how to use the win/loss statement to offset what taxes you would have to pay for any hand pays that are won throughout the year? And why, for example, it may show you put in 100,000.00 in a year but you know you never took that much cash throughout the year to play with?Kelly O.
First off, we will always advise players to find themselves an accountant that has gambling tax law experience. The rules are spelled out but many players don’t follow those rules. And we’re not accountants, although we certainly have navigated these tax laws as a consumer ourselves.
For instance, the IRS has consistently said on their website for years that win/loss statements are not enough proof for the purposes of gambling losses. Now, where this becomes critical is if you get audited – you can file however you want, but if they audit you and that’s all you have for proof, you’re likely going to have a problem.
We do offer other information in this article about what is needed to write off gambling wins. We also have this article about what win/loss statements are and how to read them. This leads to Kelly’s other question about $100,000 and not bringing that much cash.
A win/loss statement covers the amount of your wagers. You can put $100 into a slot machine and do a lot more than $100 in wagers. That’s because along the way you’re going to win something, and many players will keep spinning when they do. So that $100,000 is how much you have bet, and it will be a multiple of your bankroll.
Aside from general information like the above, however, we can’t give you specific advice about your taxes, because every person’s situation will be different. For instance, whether you use the standard deduction or not is a big factor in whether you can write off gambling winnings (if you don’t itemize, you can’t).
So, this is why we encourage the advice of an accountant. Spending a bit of money to potentially ensure avoiding very expensive mistakes is a good idea, in our view.
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