To deduct your losses from gambling, you will need to: Claim your gambling losses on Form 1040, Schedule A as Other Miscellaneous Deduction (line 28) that is not subject to the 2% limit. You cannot deduct gambling losses for an amount greater than your gambling income. No matter how you file, Block has your back. You must itemize your deductions to claim your gambling losses as a tax deduction. This means you can’t take the standard deduction for your filing status, which often amounts to more than a taxpayer’s itemized deductions. You’re allowed to deduct losses only up. To deduct losses, as with other expenses, you must keep records including receipts, tickets or statements, along with an accurate diary or log. You can't reduce your gambling winnings by your. After applying the losses-cannot-exceed-winnings limitation, the allowable gambling loss deduction for a person who is not a professional gambler is claimed on Line 28 of Schedule A (Itemized.

Irs Gambling Losses Documentation

While most miscellaneous itemized deductions cannot be taken in 2018 through 2025, those that are not subject to the 2% of adjusted gross income floor continue to be deductible. One such deduction is for gambling losses to the extent of winnings. The IRS has ruled that amounts paid to participate in daily fantasy sports, such as DraftKings and FanDuel, are wagering (Chief Counsel Advice 202042015). These activities are not merely a matter of skill; they involve something staked on an uncertain event. This means that such amounts can be deducted by those who itemize instead of taking the standard deduction. But again, they are deductible only to the extent of winnings.

115–97, § 11050(a), inserted at end “For purposes of the preceding sentence, in the case of taxable years beginning after December 31, 2017, and before January 1, 2026, the term ‘losses from wagering transactions’ includes any deduction otherwise allowable under this chapter incurred in carrying on any wagering transaction.”.

Tax On Gambling Winnings

To deduct gambling losses, you must substantiate them. In one case, a compulsive gambler convinced the Tax Court that he must have sustained more losses than the winnings reported to the IRS on Form W-2G (Coleman,TC Memo 2020-146). He spent most of his retirement savings and was way behind in his bills (his cell phone was shut off). Expert testimony accepted by the court said: “if a player gambles long enough and does not win any prizes that are exceptionally large relative to the size of the wager, it would be virtually impossible for that player to have annual net gambling winnings.” The court allowed him to take an itemized deduction for gambling losses equal to his gambling winnings.