Can I Write Off Gambling Losses?

by | Feb 4, 2023

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Gambling can be a fun, exciting way to spend time while watching sports. However, too many gambling losses can add up and cause a lot of frustration for the average person. Anyone who sees at the end of the year they gambled more and lost increasingly larger amounts should look into recouping some of those losses if possible.

One way is to take advantage of tax season. When a person reaches a certain threshold, they have to report gambling winnings and losses on their taxes. Knowing the laws and what options are out there for casual or professional gamblers make a big difference.

Can I Write Off Gambling Losses?

Yes, a person can write off their gambling losses in some instances. It’s not always the easiest to pull off, but professional gamblers tend to have better success than casual gamblers.

Factors That Determine Tax Write-Off Opportunities For Sports Gamblers

Looking for a more specific answer on write-off opportunities? These three factors will lead most to a definitive answer for their specific case.

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Gambling Activity Must Be Considered “legitimate” by the IRS

What this means is that only certain types of betting activities are eligible for deductions, such as horse racing, jai alai, and more. Sports betting is viewed as legitimate by the IRS, so people only wagering on games should be fine as long as they are using licensed sportsbooks. DraftKings, BetMGM, FanDuel, etc. all fall under this category.

Knowing Write-Off Limits

A person can’t write off all their losses. The total amount a person can claim must be less than or equal to their winnings (any income from gambling). When doing taxes, a person must be able to show that these amounts are different from one another and supported by paperwork. All the money won must be reported as taxable income.

The great thing about betting technology today is that sportsbooks automatically save a person’s history through the app. It essentially keeps the receipts to be ready during tax season.

Treating Gambling as a Business

A professional sports gambler treating it as a business has the opportunity to write losses off on their taxes in the most straightforward way. This is the same as losing money on business deals, the stock market, and more. Now that sports gambling is becoming legal in many states, this can be viewed as a legitimate business.

The tricky part with this is that people need to treat it like a full-time job. This type of exemption for writing off losses won’t be available for those who place a couple of bets a week. This needs to be a consistent job that earns money long-term.

Not only can losses be included, but full-time gamblers can also write off other connected expenses (ex. travel to and from a casino). Keep in mind that big wins and losses are already reported to the IRS by sportsbooks.

How To Get The Most Tax Help With Gambling Reductions

The more intricate the taxes, the more important it is to work with a professional. They charge some pretty hefty fees at times, but they can go through everything and maximize deductions as much as possible.

For people who have pretty straightforward taxes with gambling losses included, software like TurboTax helps walk people through it as well. It’s usually much cheaper than going to someone in person for help.

The reality of taxes isn’t going away any time soon. As more people dive into legal sports betting, knowing there is some relief with losses helps soften the blow.

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