Accounting for gambling on your tax return
By: Mark Gruba
Updated: February 4, 2013
CPA Mary Murphy of the Bonadio Group discussed the process of accounting for gambling winnings and losses Monday morning on News 8 at Sunrise.
Coming on the heels of the Super Bowl, where many people put down a friendly wager or two, Murphy said gambling winnings, no matter how small, are fully taxable. She said that includes winnings from lotteries, casinos, raffles, races and poker, as well as prizes such as cars, houses, trips and other non-cash prizes.
Whether a person is an amateur or professional gambler, there are general rules associated with losses as well. Murphy noted losses can only be used to offset winnings from wagering transactions during the same year. In addition, losses cannot be used to reduce taxable income from non-gambling sources. Losses can only be claimed as itemized deductions unless the taxpayer is in the trrade or business of gambling.
Murphy also said the Internal Revenue Service will want to see evidence of losses.
New this year, the combined gambling losses of a husband and wife who file a joint return are allowed to the extend of their combined gains.
For more information, Murphy said people can consult IRS Publication 529, Miscellaneous Deductions or Publication 525, Taxable and Non-Taxable Income by clicking here.
Coming on the heels of the Super Bowl, where many people put down a friendly wager or two, Murphy said gambling winnings, no matter how small, are fully taxable. She said that includes winnings from lotteries, casinos, raffles, races and poker, as well as prizes such as cars, houses, trips and other non-cash prizes.
Whether a person is an amateur or professional gambler, there are general rules associated with losses as well. Murphy noted losses can only be used to offset winnings from wagering transactions during the same year. In addition, losses cannot be used to reduce taxable income from non-gambling sources. Losses can only be claimed as itemized deductions unless the taxpayer is in the trrade or business of gambling.
Murphy also said the Internal Revenue Service will want to see evidence of losses.
New this year, the combined gambling losses of a husband and wife who file a joint return are allowed to the extend of their combined gains.
For more information, Murphy said people can consult IRS Publication 529, Miscellaneous Deductions or Publication 525, Taxable and Non-Taxable Income by clicking here.
