How you ever won a big jackpot at the casino? Well, if that jackpot was worth at least $1,200, you know that along with your winnings, the casino will issue you a W-2G, which notifies the IRS of your big payday. You might not care about that, except that most of us don’t walk away from the casino right after winning the big jackpot. Typically, we play a little more, and maybe even by the end of the day have more losses than winnings, or certainly less winnings than the $1,200+ of which the IRS now has notice. The Internal Revenue Code allows a taxpayer to deduct gambling losses from gambling winnings on an annual basis. But Internal Revenue Code requires a taxpayer to prove his or her gambling losses. How do you prove gambling losses? The IRS has traditionally accepted a daily log or journal kept by the taxpayer detailing the gambling activity of the day. But how many people really keep a daily journal on their gambling activities?
We have a suggestion: get a casino issued “players card” and use it every time you play the slots. Not only do you earn points towards casino freebies, by using the card you allow the casino to electronically track your gambling winnings and losses. This should serve as excellent evidence when proving your gambling losses to the IRS.