Tax time is around the corner. If you were one of the Lucky people who won money at the Casino, you may find that you are not so Lucky when you fill out your taxes. Uncle Sam loves to share in your joy by claiming a bite of your winnings for himself. That is exactly what happens to many Winners each April 15th, who dont keep a gambling diary or logbook.
The IRS requires the casinos to report any wins over $1,200 on slot and video poker machines or other games such as keno lottery or horse racing. When you have a win equal to or greater than $1200, you will be issued a W-2G form. This form lists your name, address and social security number. The casino will require proper identification before you are paid your jackpot. This is the reason you should always carry a valid form of identification with you when you visit the casino.
A copy of the W-2G goes to the IRS and you are required to list these winnings when filing your income tax. The law allows you to deduct gambling loses up to the amount of your winnings. You can only do this if you have documentation of your loses. Keeping a diary or logbook, is the way to do this.
A proper log should contain;
1) The type of game and serial number of the machine you played.
2) The date and location where you played.
3) Your wins and losses for each session or game.
4) Additional evidence of gambling activities.
Your log book must be accurate and should be filled out as accurately as possible. I find it best to record my sessions in a small notebook which I carry with me to the casino. I then transfer this into a spreadsheet on my computer when I get home.In most cases the IRS will accept this log however I am not a CPA and the best advice I can give you is to consult a professional if you do have a big win at the casinos.
If you dont keep a log book already you should start with your next visit to the casino. Many players wait until they do hit a jackpot before they even think about keeping one. I once read about a player who finally hit a large progressive jackpot. It happened on New Years Eve. He had been losing all year long but he had no documentation to prove his losses and was required to pay taxes on the full amount.
There is another reason to keep a log book that does not have anything do with taxes. Its to keep track of your own personal wins and losses. Some players tend to remember only the wins and forget about or minimize their losses. Its not uncommon to hear players say they broke even or had a little loss at the end of the year. Keeping a log will help you put playing in perspective and give you an honest account of the money you are spending for your casino entertainment. Knowing that you are keeping track of your losses may keep you from getting carried away and losing more than you should have during your visit.
If you play a game that requires skill such as video poker, live poker or blackjack it is vital to keep a log of your playing sessions. This log will help you evaluate your skill level. If you are constantly having losing sessions then you may need to do a little more studying of how to play properly. I have a separate section in my log for every game that I play. This helps me to have an accurate accounting at the end of the year each game so I know which games have been the most profitable.
Many player think that keeping a log is time consuming or unpractical. In reality it takes only a few minutes to do and you will be glad you did when you hit the big one.
Ben Franklin said, The only sure thing is Death and Taxes. We all have to pay taxes but we dont have to give Uncle Sam any more than we have to.
Until next time, remember:
“Luck comes and goes…Knowledge Stays Forever!”