Serious Gamblers Really Should Seek Help From Bookkeeping Services

Perhaps you are lucky and skilled enough to join the ranks of professional gamblers. People who are good at poker, blackjack, or other strategic casino games frequently supplement income with gambling winnings. Do not assume money won gambling is free and clear. Tax responsibilities must be met or else you will run into trouble with the IRS. Understanding current tax rules and maintaining proper records ensure the tax agency gets what it is owed and you do not have to suffer through any stressful audits.

Gambling is not a Business

Anyone with a side job is considered self-employed. Gambling, per the tax agency, is not a job. Even though you consider yourself a professional gambler, you cannot file a Schedule C and claim the totality of your gambling-related expenses as deductible. In other words, you cannot deduct travel expenses to the casino or the cost of paying for gambling lessons. Gambling earnings are a form of miscellaneous income and not self-employed income.

The Rule on Gambling Deductions

The IRS has a very simple rule when it comes to gambling deductions. You can only deduct losses up to the amount of how much you won. So, if you lost $12,000 and only won $10,000, you cannot take an additional $2,000 reduction on your taxable income.

Even if you support yourself full-time based on gambling winnings and have no other source of income, how you file and pay taxes does not change. Actually, you could end up being under greater scrutiny when the time comes to make any claims for losses since gambling is a "cash and carry" endeavor.

Maintain a Clear Log of All Gambling Activity

Ensuring proper compliance to avoid being on the losing end of an audit requires maintaining accurate records. Wise steps to take include:

• Log all gambling activity. No matter how small a wager you win or lose, be sure it is documented. 
• Do not just log one type of game. Log a collective of all your gambling activity throughout the year. Lottery ticket losses could end up offsetting wins at the slot machines.
• Ask for receipts. When wagering at a casino, ask the floor person to provide a receipt acknowledging your losses. Receipts are likely to be demanded during an audit.

Work with a Professional Accountant

Not everyone thinks bookkeeping services could help with keeping track of gambling winnings and losses but, if the volume of money wagered is significant, the help of a bookkeeper could be invaluable. Professionally maintained records could be a huge help when proof of deductions are requested.

For more information, contact Kamphaus Henning & Hood or a similar firm.