Substantiating your losses a must with Uncle Sam
Dear Mark,
You said on slot winnings more than $1,200, the dreaded
IRS form must be completed. Having never won a jackpot of
this size before until recently at Stateline, NV, I am confused.
It took that much of my money to win that jackpot. How can
I offset the tax due on my win with my losses? Lucille O.
You
can offset your gambling losses against your winning jackpot
on Schedule A as an Other Miscellaneous Deduction, but only
to the extent of your gambling win, not your income from
a 9-to-5 job. Gambling winnings are reported on tax form
1040 on the Other Income Line. Reportable gambling winnings
include lotteries, bingo, raffles, horse and dog racing
and all casino games, legal or otherwise. Yes, even an illegal
bet on Denver in the Superbowl can be considered a gaming
win, or if you wagered on Atlanta, a deduction.
Also,
Lucille, you must be able to substantiate your losses with
flawless documentation. How? By supporting your losses with
a descriptive gambling diary. You do this by keeping track
of all wagering tickets, canceled checks, bank withdrawal
statements made at the casino and credit receipts as your
proof. Granted it is impractical to record every pull of
the handle, but by keeping a daily log of where you played,
how much you gambled and how much you won or lost will be
acceptable evidence for substantiating your triumphs and
tolls of gambling.
By
the fact that you have never won a big jackpot before, I
infer that you probably did not keep factual gambling records
of your slot play. Don't despair; that is, if you use a
slot club card. Most casinos use some form of computerized
tracking system similar to the one called the SMART system
(Slot Marketing and Revenue Tracking System) that IGT provides
the casinos. With these Smart systems, the casino records
your detailed playing history. Because your play is tracked
electronically when using a slot club card, the casino should
be able to provide you with the documentation needed to
corroborate your losses.
One final thought, Lucille. Don't just get your recorded play at the casino where you hit it big. Go back to the other casinos where you have used a slot club card and ask for a printout of all your play on their machines for that year. I state "that year," as gambling losses can be used only to counterbalance gambling winnings during that same tax period. They cannot be carried forward or back to any other tax year.
Dear
Mark,
I love to play Nevada Megabucks but can't afford $3 every
pull. Occasionally I try to second guess the machine's rhythm
of hot and cold cycles and play accordingly. Obviously that
means playing less than $3 each time. Is this a bad strategy?
Rob S.
With all my parochial schooling, Rob, I always thought the
rhythm method had something to do with birth control.
No progressive machine, Rob, should ever be played without the maximum amount of coins required. With all progressives, a percentage of all coins played goes into the progressive jackpot that continually grows until some lucky soul hits it. But if you don't play the maximum amount of coins, you can't retire from your crummy job. Your jackpot with one coin inserted would be a picayune $5,000-not enough to tell your boss to "shove it." I suggest you look at a progressive meter and consider what a nincompoop you would be if you lined up the three Megabucks' symbols but failed to risk two additional tokens.
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