Gambling losses are tax deductible. But don’t go running out to your favorite casino and gamble a bunch of your money away thinking you’re going to get a tax deductions. Doesn’t work that simply.
Your gambling losses can be used to offset any gambling winnings you had during the year. Because as a quick reminder, you have to pay federal, state and maybe even local (like New York City) taxes on any money you make gambling.
Here’s how the losses help.
Let’s say you win $1,000 for the year gambling. Yeeee! The downside again is that it’s all taxable.
Now, let’s be honest and say you actually lost $3,000 during the year on your other gambling. The IRS won’t let you deduct the full $3,000 but they will let you write off $1,000 of those losses to offset the $1,000 gain. That’s how gambling losses help.
The important part in all this, keep receipts to show proof in case they ask for it.
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