Today TaxMama hears from Stuart in Florida, with a quick question. “I did my research about gambling winnings and losses, Schedule C versus Itemized deductions. Where on the Schedule C would the losing wagers go if I were filing a Schedule C as a professional gambler?”
Dear Stuart,
If gambling is your business, it provides most of the money you live on, yes?
If so, enter your winnings on Line 1 – Income.
https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
Enter your losses in one of two places – either in Part III – Cost of Goods Sold, Line 39 – Other Costs –
and include an explanation describing the “Other” as Gambling Losses. Or in Part V, on one of the blank lines – also with the description…
You can deduct your tips to dealers and other direct expenses.
Keep detailed daily logs of your daily investment, your wins and your losses. If you gamble in casinos, get a players card for additional documentation.
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I am not certain if you can write off your travel expenses and meals at the casinos or venues when you are away from home. You will need to try it and see how it survives under audit.
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Remember, professional gamblers are professional because they win – and they know when to walk away – with money.
If this is your primary profession, you should be reporting net income – not net losses.
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With net income, you have self-employment taxes.
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Simply reporting this as gambling income on Line 21 of your 1040, and deducting the losses on Schedule A – not subject to the 2% threshold, you don’t have self-employment taxes. This may make up for having to itemize.
And remember, you can find answers to all kinds of questions about gambling as a profession and other tax issues, free. Where? Where else? At TaxMama.com
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