Gamblers Declaring Losses Must Keep Written Details For IRS
The Internal Revenue Service loves casino gambling as much as the most devout patron. When gamblers win at casinos, they must fill out paperwork detailing their tax information, and the IRS considers the winnings taxable income. When gamblers lose, offsetting those winnings, it is incumbent upon them to prove they lost.
Anytime a customer hits a jackpot of $1200 or more, the casino is required to provide him with a W-2G, which makes that payout income reported to the IRS. However, the casino does not issue slips to substantiate losses.
The IRS says that it understands there are losses, and all it wants is documentation. This means a carefully kept notebook, detailing dates, times, locations, and yes, even serial numbers of slot machines played. Obviously, the IRS has never been on vacation.
Because the IRS was created by a Constitutional amendment, it has been ruled legally unrestrained by its fellow amendment, the Fifth. Thus, the IRS is the only governmental agency without the obligation to due process. With the IRS, it is guilty until proven innocent.
The case of Frank Gagliardi, recently documented on this site, may hopefully begin a significant change in the way gamblers are taxed. Gagliardi was fortunate enough to have the money to fight the government in court.
In the meantime, if you hit big, better start getting the pages of that losing notebook filled, or there might be a big surprise bill from Uncle Sam come April.
