If you gamble for fun, go ahead and enjoy yourself, as long as you stay within reason. Only gamble what you can afford to lose. And don’t forget about the tax consequences.
Strategy: Keep a daily log of your gambling activities. This should include the type of gambling activity, the location and a statement of the amounts won and lost. Receipts, tickets, etc. can be used to substantiate the claims on a client’s tax return.
Here are the records traditionally required for different types of gambling activities:
• Bingo: A record of the number of games played, cost of cards purchased, and amounts collected on winning cards.
• Keno: Copies of the keno tickets that the gambling establishment validated, copies of the casino credit reports and copies of the casino check-cashing records.
• Racing (horse, harness, dog, etc.): Records of the number of races, amounts of wagers and amounts lost.
• Slot machines: A record of the machine number and all winnings by date and the time you played the machine.
• Table games (e.g., blackjack, craps and roulette): The table number where you played and casino credit card data indicating where credit was issued.
These records may be supplemented by other items such as unredeemed tickets from the racetrack. Keep your “losers” instead of trashing them. But don’t try to fool the IRS by collecting all the losing ticket stubs from the ground. The IRS has enough horse sense to know a bettor wouldn’t make a slew of $2 wagers on different horses in the same race.
Note that gambling losses are technically “miscellaneous expenses.” But you can deduct the allowable losses without regard to the usual 2%-of-AGI limit.
Tip: Of course, if you win, the jackpot is taxable, but that’s usually a price worth paying.