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Deal Me In: A truly timely question8 February 2013
Reportable gambling winnings, Phil, can come from the casino games, as well as lotteries, online poker, raffles, bingo, horse racing, Tiddlywink tournaments, you name it. If it's any form of gambling wins, you're on the hook to Uncle Sam for your windfall.
Fortunately, the Internal Revenue Service also allows you an offset to those taxes by reporting your losses, just so long as you keep impeccable records. Gambling winnings are reported on tax form 1040 on the Other Income Line.
As a loss-claimant, you will need to substantiate your loss claims with a flawlessly documented, descriptive gambling diary. Your gambling diary should have the date and type of gambling event, name and location of the casino, poker room, racetrack, etc., table or slot machine number where the gambling took place and total dollar amount lost. You are also permitted to use canceled checks, airline tickets, credit-card cash advances, bank withdrawal statements made at the casino, legitimate losing betting stubs, and yearly statements of your wins and losses from the casino as additional confirmation.
For those who use a player's card, which, Phil, I highly recommend, your total action is recorded, with the casino maintaining a paper trail copy of your win/loss total that you can request as proof of your play. To get access to your win/loss record from your player's card, just call the casino and request it. The casino will send you a statement, sometimes upon written request, recapping your play for that year. Typically, your statement should show three totals on it: coin-in, coin-out, and net win/loss.
By the way, Phil, you can only offset your jackpot wins against losses as long as you itemize your deductions, rather than taking the standard deduction on your tax return. Gambling losses can just be used to counterbalance gambling winnings during that same tax period, plus, you may not carry losses forward, or back, to any other tax year.
For documenting your gambling loses, I recommend you buy the Lady Luck Gambling Diary. This diary complies with revenue procedure 77-29 and can be had for as little as $3 at the Gamblers Book Club.
Remember, Phil, the burden of proof falls on your shoulders, so the better your records, the better your chances of surviving an audit.
Dear Mark: You always state, "set loss limits and win goals." Is it an unrealistic goal when playing blackjack to buy-in for $100, and try to win $500-$1,000? Do you feel this is possible or improbable? Steve R.
Glued to a Naugahyde stool at a blackjack game with a hundred bucks expecting to win $1,000 is, at best, improbable. Odds-on you will lose your C-note long before you win $500, let alone a grand.
What I meant by "win goals" was "realistic" win goals, like a 50-100 percent return on your original $100 stake, not 500 or 1000 percent on your money. True winners know how to quit when they are ahead, and that's by taking the small win and running. What I am not asking you to do here is quit on a winning streak, but, Steve, I don’t want you to lose it all chasing the near impossible.
Gambling Wisdom of the Week: "Poker, n. A game said to be played with cards for some purpose to this lexicographer unknown.” — Ambrose Bierce
Best of Mark Pilarski