Today TaxMama hears from Ken in Las Vegas with this dilemma. “Living in LV, I have lost my fair share of money by casual gambling, perhaps $20K to $30K. I have only won “big” a few times, when they give you that IRS form. Problem is, those little forms never make it home, but they do get reported. Is there a way that I can tie this all together, and get a deduction for all the losses?”
Dear Ken,
If you’re losing between $20 and $30,000 per year, has it occurred to you that you might have a problem? You may want to have a chat with the good folks at https://www.gamblersanonymous.org .
More of an indication that you have a problem is that those little forms never make it home. That really shows you’re not paying attention. Please, consider taking up a new hobby.
Meanwhile, to reconstruct the information IRS has already received about your winnings, you have two options:
1) Contact each casino and ask them to give you a copy. If you remember where you won money.
Better yet, option 2: Put your tax return on extension in April and wait another month.
Then send IRS Form 4506-T, and check the box for line 8.
https://www.irs.gov/pub/irs-pdf/f4506t.pdf
Enter 12/31/2008 on line 9, and any other years you think you overlooked reporting winnings. You should get the report in about two weeks. There is no charge for these transcripts.
As to the losses, you need records. William Perez, About.com’s Tax Guide has some pretty good information about how to keep records (or reconstruct them) on your losses:
https://taxes.about.com/b/2006/04/05/keeping-track-of-gambling-losses.htm
Also, while gambling winnings are reported on the front of your Form 1040, gambling losses are itemized deductions. You will need to file a Schedule A to report your losses. That means you may not get the full benefit of the losses you can prove, if you don’t normally itemize. Read more about how this works in IRS Publication 529 and Publication 17.
https://www.irs.gov/publications/p529/ar02.html#d0e2106
https://www.irs.gov/publications/p17/ch28.html
It’s time to listen to Kenny Rogers – Know when to walk away…
And remember, you can find answers to all kinds of questions about gambling income and other tax issues, free. Where? Where else? At TaxMama.com
- Ask TaxMama :: Where taxes are fun and answers are free
- www.TaxQuips.com :: The number ONE free tax podcast online
- IRS Form 4506-T :: To get free Transcript of winning reports from Casinos
- William Perez, About.com’s Tax Guide :: Keeping loss records for gamblers
- IRS Publication 529 :: Gambling income and losses
- IRS Publication 17 :: Reporting gambling losses as itemized deductions
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