You lost more money gambling than you ever thought you would, and you are trying to figure out how to make back some of that money. You may have heard from a friend that you can deduct your gambling losses on your tax returns. Does that sound too good to be true? It may be so.
What You Need to Know about Gambling-loss Taxes
You will not be able to deduct your gambling losses in a way that allows you to lower your federal tax bill and thus make up some of the money that has been lost. Generally, gambling losses are not tax deductible. Thus, if you lose $25,000 gambling this year and have no winnings, then you are not going to be able to deduct any of that $25,000.
However, if you won more than you lost while gambling this year, then you may be able to deduct your losses up to the amount of your earnings. Thus, if you won $30,000 and lost $25,000 then you could deduct the $25,000 as long as you (a) claim the $30,000 and (b) have really good records of your winnings and losses.
Need Help with Your Gambling Taxes?
If you have already incorrectly claimed gambling losses on your federal tax returns, then you may need help with the IRS. For more information about how an experienced tax lawyer may be able to help you, please call us today at 800-721-7054. You can also learn more about your rights in our FREE book, The Ultimate Survival Guide for IRS Problems.