Personal Tax Deduction – Accounting for Gambling Losses

Businessman Playing Poker

Losses incurred through gambling are tax-deductible but only to the extent of your winnings (you can only claim $5,000 if your winnings are $5,000 and your losses are $20,000, for example). You need to be eligible to itemize your deductions, and you can’t claim any tax relief if you claim a standard deduction. You will need to produce documentation to prove your losses, such as Form 5754, Form W-2G, credit records, and wagering tickets.

If you win money or prizes from gambling, it is considered to be income and can be taxed. You have to report all gambling winnings on your tax return; this includes all cash winnings and fair market value for non-cash winnings. Losses can be deducted if you itemize your deductions, but these losses can’t be greater than the income reported from gambling. If you wish to take deductions for your losses, you must obtain a statement from the institution where you lost the money.

For further questions about Phoenix personal income tax accounting, please contact Singer Tax & Accounting, PC today at (602) 482-8006.

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