Risk Takers Beware: Don’t Gamble with the IRS!

Do you enjoy the thrill of gambling or entering contests? Then be sure to track your winnings and losses carefully as you’ll need to report them on your individual income tax return.Whether you play the lottery, bet on animal races, or visit casinos, you must report any winnings to the IRS as “Other Income.” Same goes for non-cash prizes, such as cars or trips; report the fair market value.Some payers provide you with a W-2G at the end of the year (and, of course, the IRS will receive a copy), but even if they don’t, you’re responsible for reporting any winnings.By definition, “gambling” suggests losses are also likely to occur. Track these carefully by saving receipts for amounts you paid.  You can deduct losses on Schedule A to offset some of your winnings.  Note, though, your maximum deduction is limited to the amount of your winnings.If your return is audited by the IRS, good records are invaluable in supporting your claims. Good bookkeeping is essential. Using a log or diary, along with receipts, statements, or tickets, proves to the IRS the information provided on your return is accurate.If you engage a tax preparation service, remember your preparer needs documentation to support the return he or she completes.  CPAs and Enrolled Agents must follow a strict code – if you use an unlicensed preparer, you’re taking yet another chance.For tax accounting service you can depend upon, Patrick & Robinson CPAs maintains a proven track record of supporting our work.Contact us if we can help:  Office@CPAsite.com or 904-396-5400.