Keep gambling records for easier filing in tax season
By Mark Gruetze
Published: Thursday, April 12, 2012, 4:55 p.m.
When you resign yourself to doing your income-tax return, remember to look for your gambling records while rummaging around for the mortgage statement, student-loan paperwork and W-2 forms.
Gambling records• Who keeps gambling records?
Under federal law, any gambler who wins money or other prizes through a casino, lottery, online play, home game or an illegal game in the back room of the corner bar. If you walked away from even one session with more than your buy-in, Internal Revenue Service rules say you must report it as income.
"Gambling winnings are fully taxable and must be reported on your tax return," says the IRS, which requires taxpayers to report all sources of income, legal or illegal.
Jean Scott, the video poker guru and "Queen of Comps" who co-authored "Tax Help for Gamblers," says gamblers should make a habit of tracking their wins and losses.
"You're gambling enough when you're in the casino. You don't want to gamble then on the IRS by not having good records," she says.
The second edition of her book, first published in 2007 by Huntington Press, recently became available at www.ShopLVA.com. The new edition includes advice aimed at professional gamblers and updated information about online gambling and each state's tax laws.
For example, Pennsylvania allows gamblers to report net winnings -- that is, wins minus losses. While the state does not tax lottery winnings, lottery losses are not deductible. Some states, including West Virginia, do not allow any gambling losses to be deducted. Mississippi charges a nonrefundable income tax on some casino winnings.
For federal income tax, the law is clear: Any gambling win must be reported.
"All income must be counted whether you get paperwork or not," Scott says. "Like everything else on a cash basis, some people follow the law and some don't."
Slot players lucky enough to hit a jackpot of $1,200 or more receive IRS form W-2G showing how much they won. The casino sends a copy to the IRS.
"If you get W-2Gs, you need to show that those (jackpots) were won," Scott says. "If you put less in than the W-2Gs, then, they're going to ask about the W-2Gs. So, you do what makes sense, even though the IRS doesn't always make sense."
That can pose a problem for gamblers who don't itemize deductions. The IRS allows taxpayers to declare gambling losses as a deduction, but for recreational gamblers --the vast majority of us -- losses cannot exceed winnings.
Typically, the win reported on a W-2G differs from the actual result of that session. Let's say Kim hits a $1,500 jackpot and gets a W-2G with her payout; she'll probably keep playing. Maybe she walks away with "only" $1,000; or maybe it's Kim's lucky day and she hits several smaller jackpots, giving her a total of $1,750 before she quits.
Her federal-tax return should show at least the $1,500 win. Keeping accurate records of her other casino visits would help Kim document the days when she's not as lucky and itemize the losses.
Scott says a gambler's log should include the date, casino name, type of game -- Wheel of Fortune, Jacks or Better, blackjack or whatever -- length of time played and net result. The IRS suggests including slot-machine ID numbers, but Scott says that's not practical for players who move from one to another.
A professional gambler, Scott uses a pocket calendar to record her sessions. Digitally inclined gamblers can get apps for their smart phones.
Casinos offer year-end win-loss statements to players club members, but Scott says those are notoriously inaccurate. The statements reflect play only when a card was used at the slots or table games; some table-game buy-ins or wins might be estimates. Wins and losses at live poker seldom are included.
As a test, I downloaded a win-loss statement from a Mississippi casino where I stayed a total of six nights during two trips last year. It says I had a net gambling profit of $5. Trust me: I had a net loss there.
Scott cautions gamblers not to submit their diaries, calendars or win-loss statements with their returns.
"It's just too much information and liable to open a bigger can of worms," she says. "Wait till they ask."
$200,000 prize pool for blackjack tourney
The Meadows is planning a blackjack tournament with a $200,000 prize pool.
Satellites will start April 7, with a two-day main event in June. Players can earn seats in the satellite tournaments through regular play on specified dates.
Each of the three satellites will have 90 players and a $10,000 first prize; 18 players from each satellite will advance to the Main Event. First place there is guaranteed to pay $100,000, with $25,000 for second and $15,000 for third.
Slot players at Pennsylvania's 10 casinos lost $53.4 million during the week ended Feb. 26, the Gaming Control Board reported. That's up from $50.2 million in the comparable week last year.
The state gets 55 percent of that gross slot revenue, or what's left of players' wagers after jackpots are paid. Statewide, slot machines have paid out at a 90.07 percent rate since the fiscal year started in July. For every $100 bet, the machines returned $90.07. Payout rates for Western Pennsylvania casinos:
- 89.88%: Rivers; slot revenue for the week was $6.38 million, up from $5.62 million last year.
- 89.8%: Meadows; slot revenue for the week was $5.22 million, down from $5.38 million last year.
- 90.44%: Presque Isle in Erie; slot revenue for the week was $3.26 million, up from $3.1 million last year.
QUESTION OF THE WEEK
What happened with Bodog.com?
Federal prosecutors charged it with money-laundering and violating Maryland law by operating a sports-betting business. Founder Calvin Ayre posted a statement saying the site had stopped taking U.S. bets, and called the indictments an abuse of the justice system. The American Gaming Association says more than 2,000 other offshore sites offer online poker and other gambling.
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