Substantiating your losses a must with Uncle Sam
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.
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.