You, Blackjack, and the IRS

Ah, the euphoria of winning! You’ve been having the time of your life. The blackjack tables have been most kind to you in 2009. You have money and bragging rights. And if the IRS says you’ve won too much money you might only be left with bragging rights.

Winning at blackjack only up to a certain point can go unreported. Once you’ve won too much you have to report your winnings when you file your income tax return. What’s a good indicator that you have to report it? If the casino gives you a W-2G form that’s a pretty good sign.

Casinos will give out W-2G forms on taxable winnings because they have to report such winnings to the government. So if you know they’re filing, you had better be too.

And this applies to online blackjack and regular blackjack alike.

No, winning something like $100 doesn’t need to be reported. Winning $1,000 might be another story.

Yes, reporting your winnings and having to give up some of your blackjack winnings is a downer. But it’s better than paying fees that could cost you all of what you won. Also on the upside is that you can claim your loses at the blackjack table.

Yes, you can claim your loses when gambling at a blackjack table.

It’s not as simple as saying that you played blackjack during the past year and the government has to pay you back.

One thing to keep in mind, is your standard deduction versus your blackjack losses. Say your standard deduction is $5,000 and your blackjack losses are only $3,000—stick with the standard deduction.

The other thing to keep in mind is tracking your gambling. It’s possible the IRS will want to see documentation of your blackjack playing throughout the year to prove your losses.

The easiest way to do this is to keep a blackjack journal. In such a book you will want to record the date you played and that you were playing blackjack. You will want to write down the name and address of where you played. Take down the names of anyone else you were playing with. And of course you will want to write down how much you won and how much you lost.

Also to be kept if you’re serious about deducting your blackjack losses are W-2G forms, records of bank withdrawals in which the money was for gambling and credit card statements from cards that were used for the same reason.

In other words you need to be able to prove to the IRS that you lost that much in blackjack should they choose to audit you. And, no, the cost of hotel rooms, travel and other gambling ‘expenses’ don’t fall under your gambling loss deduction.

The point to claiming losses from blackjack is that you need proof. And having your proof ahead of time will make life easier for you should an audit be coming your way.