gambling wins or losses

Money gained through gambling is considered taxable income. All cash winnings must be included, along with the fair market value of non-cash prizes won through gambling. You can claim gambling losses as a deduction but will not be allowed to claim more than your winnings. For example, if you lose $40,000 but win $12,000, the maximum amount you can claim is $12,000. The IRS requires you to keep a diary of all your winnings and losses from all forms of gambling.

You are not permitted to subtract your losses from your winnings and report a net profit or loss. You also are not allowed to report only losses and no winnings. You have to owe tax on your winnings before you can claim for losses, so deducting these losses only enable you to avoid paying tax on your winnings.

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