I have been audited for 2007 Income Tax Return for my gambling
Experience: Technical Analyst in Financial Markets -- Experience of more than 10 years in consulting
replied 6 years ago.
The following rules only apply to casual gamblers. Gambling winnings are fully taxable and must be reported on your tax return. You must file Form 1040 and include all of your winnings. A payer is required to issue you a Form W-2G (PDF) if you receive certain gambling winnings or if you have any gambling winnings subject to Federal income tax withholding. All gambling winnings must be reported irrespective as to whether any portion thereof is subject to withholding. In addition, you may be required to pay an estimated tax on your gambling winnings.
Coming to your query, you may deduct gambling losses only if
you itemize deductions. Claim your gambling losses as a miscellaneous deduction on Form 1040, Schedule A.However, the amount of losses you deduct may not be more than the amount of gambling income you have reported on your return. It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.
This means that so long you have documents and receipts to justify you expenses / losses, you do not owe to IRS, but within the specified limits. (i.e. upto the amount not exceeding the gammbling wins). So long as you are witnin, you do not owe to IRS.Source: www.justanswer.com