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If you hit it big betting on a long-shot remember the tax consequences!

Generally, you owe tax on income from gambling activities, but you may be able to claim losses to offset some or all of this amount.

Maintain good records of all gambling activities. This should include what type of gambling activity, the location and a statement of the amounts won and lost, receipts, tickets, etc. can be used to substantiate the claims on your tax return.

The basic tax rule is that gambling losses are deductible up to the amount of your winnings. However, despite a common perception, gambling losses aren’t deducted as miscellaneous expenses.

Note: The deduction for miscellaneous expenses, subject to certain limits, is suspended for 2018-2025. That’s the good news. But the bad news is that gambling losses can be deducted only if you itemize. This write-off isn’t available if you claim the standard deduction.

Different types of gambling activities require different types of records. Here’s a quick rundown:

• Bingo: A record of the number of games played, cost of cards purchased and amounts collected on winning cards.
• Keno:  Copies of the keno tickets that were validated by the gambling establishment, copies of the casino credit reports and copies of the casino check cashing records.
• Racing (horse, harness, dog, etc.): Records of the number of races, amounts of wagers and amounts won and lost.
• Slot machines: A record of the machine number and all winnings by date and time the machine was played.
• Table games (e.g., blackjack, craps and roulette): The number of the table where you played and casino credit card data indicating where credit was issued.

These records may be supplemented by other items such as unredeemed tickets from the racetrack. Keep your “losers” instead of simply trashing them. But don’t try to fool the IRS by collecting fistfuls of ticket stubs. The IRS has enough horse sense to know a gambler wouldn’t make a slew of $2 wagers on different horses in the same race.

Tip: If you win, the jackpot is taxable, but that’s usually a price well worth paying.[/vc_column_text][us_image image=”3056″][/vc_column][/vc_row]