Can I Write Off Casino Losses

The IRS does let you deduct gambling losses from gambling winnings, though. Youcan’t deduct more than your winnings, of course, the IRS isn’t that stupid.You can’t say you won $1,000 and lost $5,000, for a net loss of $4,000. Gambling Loss Limitation. You can't deduct more in gambling losses than you have in gambling winnings for the year. For example, suppose you reported $13,000 in gambling winnings on Line 21 of.

We doubt that anyone ever woke up thinking, “Gee, I hope I get audited by the IRS this year”. An IRS audit could easily be one of the worst things that could happen to you this year. So if you want to avoid receiving that ominous letter from the IRS that your 2015 tax return is being audited here are seven red flags you need to totally avoid.

Not reporting all of your taxable income

Those 1099’s and W-2s you received this past January? You weren’t the only one that got them. The IRS got them too. It’s important to make sure you report all of the required income on your return. The computers used by the IRS are pretty darn good at matching the numbers on your return with the numbers on your 1099s and W-2s. If they turn up a mismatch this will create a red flag and the IRS computers will spit out a bill. If those darn computers do make a mistake and you receive a tax form that shows income that wasn’t yours or lists incorrect amounts of income, you will need to get the issuer to file the correct form with the IRS. And what about that income you earned on those side jobs? In most cases you should have received a 1099 documenting your earnings. If not, this is definitely a case where it’s better to be safe than sorry and report it.

Taking deductions that are higher than average

If the IRS spots deductions on your return that are disproportionately large in comparison with your income, it may pull your return for review. For example, a very large medical expense –again out of proportion to your income – could cause a red flag. However, if you do have the documentation to support the deduction then don’t be afraid to claim it.

Claiming really big charitable deductions

Charitable deductions can be a great write off. Plus, when you contribute to a charity it can make you feel all fuzzy and warm inside. However, if those deductions are disproportionately large in comparison with your income, it will raise a red flag. The reason for this is because the IRS knows what is the average charitable deduction for people at your level of income. Did you donate some very valuable property? In this case we hope you got an appraisal for it. Did you make a non-cash donation over $500? Then you better make sure you file form 8283. if you don’t file this form or if you don’t have an appraisal supporting that big donation you’ll become an even bigger target for auditing.

Claiming big gambling losses or not reporting gambling winnings

If you’re a recreational gambler you must report your winnings as “other income” on the front page of your 1040 form. If you’re a professional gambler you will need to report your winnings on Schedule C. If you don’t report gambling winnings this can draw the attention of the IRS – especially in the event that the casino or other venue reported your winnings on form W-2G. It can also be very risky to claim big gambling losses. In fact, what you should do is deduct your losses only to the extent that you report your gambling winnings. For example, if you were to report you had won $5000 gambling but had losses of $20,000, this could cause a red flag. Also, only professional gamblers can write off the costs of meals, lodging and other expenses related to gambling. And the surest way to invite an audit is by writing off what you lost at gambling but no gambling income. If you’ve done any of these things, or are worried about some other common tax return mistakes, it might be wise to file an amended tax return and account for those wins or losses correctly.

Writing off a hobby as a loss

You will dramatically increase the odds of “winning” an IRS audit if you file a schedule C showing big losses from any activity that could be considered a hobby such as jewelry making, coin and stamp collecting, dog breeding, and the like. IRS agents are especially trained to ferret out people who improperly deduct losses associated with a hobby. You must report any income your hobby generated or whatever but can then deduct your expenses up to that income level. But the IRS will not allow you to write off losses from a hobby. So if you want to write off a loss you must be running your hobby as if it were a business and must have the reasonable expectation of generating a profit. As an example of how this works if your hobby generates a profit in 3 out of every 5 years then the IRS will presume that you’re actually in business to make a profit unless it can prove something to the contrary. Of course, if you’re unfortunate and win the audit lottery the IRS will make you prove that you do have a legitimate business and that it’s not just a hobby. So make sure you keep all documents that support your expenses.

If you report income from self-employment of $100,000 or more

Let’s suppose that you’re self-employed, had a really great year and had earnings of $100,000 or more you are reporting on schedule C. This is likely to trigger an IRS audit because according to the IRS people who file a schedule C are more likely to under report their income and overstate their deductions. What this means is that if you earn $100,000 or more and are reporting it on schedule C you’ll need to make sure you have the documentation necessary to support your deductions and again, make sure you report all your income very accurately.

If you work in certain industries

The IRS knows based on past audit experience that there are certain activities or industries that have a higher incidence of what’s technically called noncompliance but really means cheating on their taxes. Included in this group are the tax returns of air service operators, gas retailers, auto dealers, attorneys and taxi operators. So, if you’re employed in one of these industries or activities and don’t want to suffer an IRS audit, it’s best to follow the old adage that honesty is the best policy.

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Catman88
LSU Fan
Baton Rouge, LA
Member since Dec 2004
49125 posts

Can gambling losses be deducted from 1099-MISC?Posted by Catman88 on 1/29/13 at 7:26 am
Losses
The IRS says that Cash and Trips count. But I didnt get a 1099-G for my wife winning 4 plane tickets to the carribean (they valued at 4001). They sent a 1099-MISC. So Im not sure how that will work thats a trip we won. I would think I would be able to deduct anything I lost but not sure if the lack of -G will be problematic. Since it was won through a radio station and not a casino does that not count?


yellowfin
Chicago Cubs Fan
Coastal Bar
Member since May 2006
95109 posts

re: Can gambling losses be deducted from 1099-MISC?Posted by yellowfin on 1/29/13 at 7:36 am to Catman88
Did you pay for a chance to win the trip or just got lucky by being 'caller #8'? The second isn't gambling

Catman88
LSU Fan
Baton Rouge, LA
Member since Dec 2004
49125 posts

re: Can gambling losses be deducted from 1099-MISC?Posted by Catman88 on 1/29/13 at 7:48 am to yellowfin
My wife entered via email so yea not gambling. Also looking into the BS amount of 4001 for 4 tickets. The cost if I were to book today would be 2327.60 for the 4 tickets we used. So looking at putting an adjustment of FMV of -1672.40 with 2 used for a trip to St Thomas/St John and 2 for a trip to Nassau. Im not sure where in the Carribean you would pay 1000.25 per person to fly to. I did print out the booking data from delta.


BACONisMEATcandy
LSU Fan
Member since Dec 2007
46547 posts
Online

re: Can gambling losses be deducted from 1099-MISC?Posted by BACONisMEATcandy on 1/29/13 at 8:44 am to Catman88
quote:
Im not sure where in the Carribean you would pay 1000.25 per person to fly to. I did print out the booking data from delta.

Depends on the fare class of the ticket... There are more than you think
LINK

Catman88
LSU Fan
Baton Rouge, LA
Member since Dec 2004
49125 posts

re: Can gambling losses be deducted from 1099-MISC?Posted by Catman88 on 1/29/13 at 10:30 am to BACONisMEATcandy
These were economy tickets only. Didnt have the option to book another category. What is crazy is that they valued them at 4k but they dont bother take into account that we literally had 2 days only to book. They were giving away tickets that were purchased on points that were expiring on a friday and they awarded them on a Wed.

iAmBatman
USA Fan
The Batcave
Member since Mar 2011
10666 posts

re: Can gambling losses be deducted from 1099-MISC?Posted by iAmBatman on 1/29/13 at 10:49 am to Catman88
Gambling losses can be deducted only up to your winnings.
Example:
You win $5,000 in 2012 and lose $7,500. You can only deduct $5,000 of the losses.
You win $5,0000 in 2012 and lose $4,000. You can deduct the whole $4,000 since it is less than your winnings. You would be responsible for taxes on the remaining $1,000 of you winnings.

Can I Write Off Gambling Losses


Catman88
LSU Fan
Baton Rouge, LA
Member since Dec 2004
49125 posts

re: Can gambling losses be deducted from 1099-MISC?Posted by Catman88 on 1/29/13 at 11:09 am to iAmBatman
Well I understand that. The question was if a prize of this matter counted as 'winnings' or if it had to be specific to gambling and putting money at risk.
If I had 25k in gambling losses and won a 25k MSRP car in a drawing vs 25k in gambling losses and won a 25k MSRP car at the casino slot.
Seems to be that they are not treated equally. In one case I would get to duduct but in the other case I would be stuck with the 25k income. At which I could claim FMV of the car as being around 19k instead of 25k.

C
Atlanta Falcons Fan
Houston
Member since Dec 2007
26665 posts
Online

re: Can gambling losses be deducted from 1099-MISC?Posted by C on 1/29/13 at 11:21 am to Catman88
Can I Write Off Casino Losses
quote:
What is crazy is that they valued them at 4k but they dont bother take into account that we literally had 2 days only to book

Interesting way to reduce losses by an airlines...

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iAmBatman
USA Fan
The Batcave
Member since Mar 2011
10666 posts

re: Can gambling losses be deducted from 1099-MISC?Posted by iAmBatman on 1/29/13 at 11:26 am to Catman88
quote:
If I had 25k in gambling losses and won a 25k MSRP car in a drawing vs 25k in gambling losses and won a 25k MSRP car at the casino slot.

I see what you're saying and I'm not exactly sure what the IRS uses as the definition of 'gambling.' To me, it would seem that if you paid for a chance to win something, then that would be gambling. There is also the issue of people doing those sort of raffles as a charity (like St. Jude Dream Home) and then writing off the cost of the ticket as a donation. I really don't know all the ends and outs but I'm sure Poodlebrain could fill in the gaps.

Replies (0)
re: Can gambling losses be deducted from 1099-MISC?Posted by sneakytiger on 1/29/13 at 11:29 am to Catman88
LINK
Prizes and awards.
If you win a prize in a lucky number drawing, television or radio quiz program, beauty contest, or other event, you must include it in your income. For example, if you win a $50 prize in a photography contest, you must report this income on Form 1040, line 21. If you refuse to accept a prize, do not in­clude its value in your income. Prizes and awards in goods or services must be included in your income at their fair
market value.
I think the bolded part gives you your answer - the instructions are telling you to report it on a different line than where you would report gambling losses. So I don't think you can offset.


re: Can gambling losses be deducted from 1099-MISC?Posted by LSUchuck on 1/29/13 at 12:03 pm to sneakytiger
It is reported as other income not subject to SE taxes. Nothing can be used to offset it.

Catman88
LSU Fan
Baton Rouge, LA
Member since Dec 2004
49125 posts

re: Can gambling losses be deducted from 1099-MISC?Posted by Catman88 on 1/29/13 at 12:23 pm to LSUchuck
Well IRS does say that prizes are subject to FMV.
I also had to pay the international taxes to fly to Nassau. That is normally included in the ticket price. So Im guessing I could reduce the winnings by the 95 dollars per ticket I incured there as well since I have that documented. Likely I will just keep my printout of the real cost and use that to determine FMV.

Replies (0)
Newbomb Turk
Navy Fan
perfectanschlagen
Member since May 2008
9961 posts

re: Can gambling losses be deducted from 1099-MISC?Posted by Newbomb Turk on 1/30/13 at 8:42 am to Catman88
You do not have to claim the full MSRP on your winnings. If you can document that you could have (or did) gotten the prize for a lot less, you need only claim that amount. So, if you won a car with an MSRP of $25K, but you can get a statement from a dealer that they sold that same car with the same options for $21K, that's all you need to claim.
You really should get contemporaneous documentation, however, as claiming something less than what is shown on the 1099 just might invite an audit. However, if you don't want to risk an audit (because you may have other 'iffy' items on your return), there is a method by which you can call the IRS and file a Form 4598 to get the prize company to issue a corrected 1099.
As far as deducting losses, you're out of luck. The IRS takes the position that sweepstakes type winning (where you don't really have to do anything but enter -- i.e., you're not putting up any of your money to get a chance to 'win') are not considered 'gambling winnings' and therefore cannot be offset by gambling losses.

Catman88
LSU Fan
Baton Rouge, LA
Member since Dec 2004
49125 posts

Off
re: Can gambling losses be deducted from 1099-MISC?Posted by Catman88 on 1/30/13 at 10:26 am to Newbomb Turk
Yea I dont have anything fishy on my return. Pretty standard return. Have all documentation. Would rather not pay 400 extra in taxes because they pulled a number out of thin air. 4 tickets 1k each. How fricking lazy was that.

Newbomb Turk
Navy Fan
perfectanschlagen
Member since May 2008
9961 posts

re: Can gambling losses be deducted from 1099-MISC?Posted by Newbomb Turk on 1/30/13 at 2:10 pm to Catman88

Can You Write Off Gambling Loss

Can i write off gambling losses on my taxes
Call the IRS, present your documentation and they may have the prize company issue a new 1099.
Again, your shit-out-of-luck with the gambling losses.

Can You Write Off Gambling Losses In 2018

Can i write off casino losses
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