Gambling Losses are Tax Deductible

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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IRS Rules on Deducting Charitable Giving

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Every year people give away billions in money and items to charities. This giving helps people in need. There are tax benefits that can come with that giving. To help provide guidance on that giving, the IRS has guidelines. Here are the guidelines:

Rules for Charitable Contributions of Clothing and Household Items

To be tax-deductible, clothing and household items donated to charity generally must be in good used condition or better. A clothing or household item for which a taxpayer claims a deduction of over $500 does not have to meet this standard if the taxpayer includes a qualified appraisal of the item with the return.

Donors must get a written acknowledgement from the charity for all gifts worth $250 or more that includes, among other things, a description of the items contributed. Household items include furniture, furnishings, electronics, appliances and linens.

Guidelines for Monetary Donations

To deduct any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.

Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity.

These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.

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