Meridian Star


March 23, 2014

Gambling can be taxing

MERIDIAN — If you gamble, you need to keep a record of your winnings and losses for tax purposes. Gambling includes not only lotteries, but also bingo, casino gambling, raffles and pools. Record the date and type of gambling, the amount won or lost, and where you gambled. Support this record with wagering tickets, canceled checks or credit card records, and payment slips or W-2G forms for winnings.

    You are required to report all your gambling winnings. Above certain limits, the payer (the state lottery commission or the casino, for example) is required to report your winnings to the IRS. When your return is processed, IRS computers will match the income reported on your tax return with that reported by third parties. If there are discrepancies, you'll generally be contacted by the IRS.

    Winnings from gambling are taxable whether or not you receive “Form W-2G, Certain Gambling Winnings,” from the sponsor of the wager or contest. It doesn't matter how much you win either. On your federal income tax return, all your winnings are ordinary income, taxable at your regular rate.

    What about your gambling losses? They are tax-deductible – as long as you itemize. That means you're not allowed to subtract your total losses from your total winnings and report the net amount on Line 21 of your federal Form 1040.

Instead, you claim some of your losses as an “other miscellaneous deduction” on “Schedule A, Itemized Deductions.” Why only some losses? Because the rules limit the amount you can deduct to the total of the winnings you report.

    A minor consolation: Gambling losses are not subject to the 2 percent-of-AGI rule, so the only limitation is the amount of your winnings. Of course, you'll also need to be able to support your total claimed losses with records such as the actual vouchers or a log book.

    David Compton is a Certified Public Accountant with offices in Meridian and Birmingham, Ala.

Text Only
Biz Marquee
New Today

Do you think people should be allowed to carry firearms into government buildings?

     View Results
Twitter Updates
Follow us on twitter
AP Video
US Ready to Slap New Sanctions on Russia Kerry: Not Worried About Israeli Criticism Boater Rescued From Edge of Kentucky Dam Girl Struck by Plane on Florida Beach Dies Rodents Rampant in Gardens Around Louvre House to Vote on Slimmed-down Bill for Border Looming Demand Could Undercut Flight Safety Raw: 2 Shells Hit Fuel Tank at Gaza Power Plant Raw: Massive Explosions From Airstrikes in Gaza Giant Ketchup Bottle Water Tower Up for Sale Easier Nuclear Construction Promises Fall Short Kerry: Humanitarian Cease-fire Efforts Continue Raw: Corruption Trial Begins for Former Va Gov. The Carbon Trap: US Exports Global Warming Traditional African Dishes Teach Healthy Eating
Hyperlocal Search
Premier Guide
Find a business

Walking Fingers
Maps, Menus, Store hours, Coupons, and more...
Premier Guide