a log may seem unnecessary for people who expect to show a net loss for the year. However, one of the appeals of gambling is that the unexpected can happen. For example, you take four trips a year to Vegas and play dollar slot machines. The first three trips are losers and leave you $2,200 in the hole. However, on the last hour of the last day of your last trip, you line up three diamonds and win $2,000.
In this scenario, the IRS assumes you won at least $2,000 for the year because they received notice of this $2,000 win from the casino in the W-2G form. If you can’t document those losses, you can’t offset the $2000 win and will have to pay income tax on it. You not only added insult to injury, you’ve possibly added insolvency as well.
Keeping a gambling log
The IRS addresses the issue of proper record-keeping and documentation for gamblers. The basic requirements include
Date and type of gambling event (poker, blackjack, and so on)
Name and location of casino, racetrack, or gambling venue
Table or slot machine number where gambling took place
Who you were with when gambling
Total dollar amount you won or lost
Wagering with a group: Who pays the tax?
An old joke goes like this: Woody takes his yearly trip to Las Vegas. His friend, Dave, gives Woody $500 and tells him to bet it all on lucky number 22 at the roulette wheel. Woody dutifully takes the money and, upon arriving in Sin City, he goes straight to the wheel and plunks $500 down on Number 22. Amazingly, Number 22 hits, and Woody wins $17,500. After raking in all the chips, Woody says, “Wow, that sure was a lucky number. Now I guess I’d better make the $500 bet on Number 22 for Dave.”
If you’re not as ethically challenged as Woody, you at least split the winnings with your fortunate pal. And the word from the IRS is that you can share the tax obligation as well. Form 5754 covers those situations and alerts the IRS that more than one person actually won the prize.
Part 2
Conquering the Table Games
IN THIS PART …
Get the lowdown on casino etiquette.
Master key poker tactics and learn about the most popular poker games.
Hone your blackjack skills and take advantage of its low house advantage.
Learn how to shoot dice in a pulse-pounding game of craps.
Take a spin on the roulette wheel and learn help strategies to stretch your bankroll.
Demystify baccarat and learn that it’s not just for high-rollers.
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