Can i deduct gambling losses from my taxes?

Question

so basically i had a pretty rough year sports betting. won some but lost way more overall. my buddy mentioned something about writing off gambling losses but that sounds too good to be true?? like the irs actually lets you do that? anyone here actually done this before

Accepted Answer

yeah you can but theres a catch - you can only deduct losses up to the amount of your winnings. so if you won 5k and lost 8k you can only deduct 5k, not the full 8k. you also gotta itemize deductions instead of taking the standard deduction which for most people isnt worth it unless you have a ton of other deductions too. i keep track of everything through My Bookie since they have decent transaction history but honestly you should be logging all your bets regardless of where you play. save your W-2Gs if you get any

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Can confirm this is exactly how it works. Did it last year and saved a decent chunk. The key is really keeping good records - dates, amounts, type of bet, everything. My accountant was impressed I had it all in a spreadsheet lol

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honestly the whole system is so dumb. you have to report ALL winnings as income but then jump through hoops to deduct losses?? and if you take the standard deduction you just eat the losses completely. feels like the irs wants it both ways

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i mean i get being frustrated but thats kinda how all deductions work tho? its not specific to gambling. itemizing vs standard deduction applies to everything. at least they LET you deduct gambling losses, some countries dont allow it at all

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Fwiw the IRS has gotten stricter about gambling audits in recent years because of all the new legal sportsbooks. They're getting reports directly from the books now so don't try to hide winnings - they already know. Just be honest and keep documentation.

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idk man do regular people actually itemize deductions anymore? thought the standard deduction was like 14k now. youd need a LOT of gambling wins (and other deductions) for this to even matter right?

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nah its actually $13,850 for single filers but yeah youre not wrong. HOWEVER if youre married filing jointly its $27,700 and between mortgage interest, state taxes, charity, AND gambling stuff it can add up faster than youd think. ran the numbers last year and itemizing saved me like $800 over standard

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wait so do the sportsbooks send you tax forms automatically or do you have to request them??

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They send W-2G forms automatically if you hit certain thresholds. For sports betting its usually 300:1 odds AND $600+ profit on a single bet. But you still owe taxes on all winnings even if you dont get a form - thats where people mess up

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does this apply to crypto gambling too or is that different?

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Same rules technically apply but reporting is messier since most offshore crypto books dont send tax forms to the IRS. Youre still legally required to report it though. And you might have additional crypto tax stuff to deal with if the value changed between when you deposited and withdrew

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Another thing worth mentioning - professional gamblers can deduct losses as business expenses which is actually better tax treatment. But the bar for proving youre a professional is really high, not just betting a lot. Need to show its your primary income source basically.

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yeah what dave said is spot on. learned this the hard way a few years back. now i keep a simple google sheet with every single bet and update it weekly. sounds annoying but its actually kinda nice to see everything laid out, helped me realize how much i was actually losing lmao

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