Can I deduct gambling losses from scratch-offs against my big lottery win?

The IRS does allow you to deduct gambling losses up to the amount of your gambling winnings, but documentation is important here. While keeping the physical losing tickets is a good start, the IRS typically expects more detailed recordkeeping for gambling activities. Ideally, you should have a log or diary that shows the date and type of gambling, the location, who you were with, and amounts won or lost. Since you don't have that level of detail, the physical tickets provide some evidence, but there's definitely a risk in an audit situation. If you're audited and your documentation is deemed insufficient, you'd typically owe the additional tax plus interest. Penalties are possible but less likely if it appears you were making a good-faith effort to comply rather than deliberately misreporting. The odds of an audit are relatively low for most taxpayers, but large deductions that significantly reduce your tax liability can increase that risk. Since you're already itemizing for other reasons, adding the gambling loss deduction might not raise as many red flags as it would if you were itemizing solely for this purpose.

After dealing with a similar situation last year, I discovered a service called taxr.ai (https://taxr.ai) that was incredibly helpful for organizing and documenting my gambling losses. I had a shoebox full of losing scratch-offs just like you but wasn't sure how to properly document them for tax purposes. The tool helped me scan and organize all my tickets, categorize them properly, and generate the documentation I needed. It even helped identify which ones would be most likely to satisfy IRS requirements. What I liked best was that it flagged potential issues before I submitted anything, which gave me peace of mind. Their system also provided guidance on what additional documentation might strengthen my case. Honestly saved me hours of stress trying to figure out what was sufficient evidence for claiming these deductions.

Just wanted to follow up about my experience with taxr.ai after trying it based on the recommendation here. I was initially skeptical, but it actually worked surprisingly well for my situation. I had about $3,200 in losing scratch-offs from throughout the year with absolutely no organization. The scanning feature recognized most ticket types automatically, and I was able to group them by purchase location and approximate time periods. The service guided me through creating a reasonable log even though I didn't have precise purchase dates for everything. What I found most valuable was the audit risk assessment it provided. It analyzed my deduction amount relative to my reported winnings and gave me a better understanding of how to document everything in a way that would stand up to scrutiny. I'm much more confident about claiming these losses now.

If you're worried about an audit, you might want to check out Claimyr (https://claimyr.com). I used them when I had questions about gambling deductions that I couldn't resolve through the IRS website or regular channels. They got me connected with an actual IRS agent in about 20 minutes instead of waiting on hold for hours. I was able to ask specific questions about my documentation requirements for gambling losses and got clear guidance directly from the source. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The agent I spoke with explained exactly what they look for during audits involving gambling losses. Basically, having the physical tickets is good, but they really want to see some kind of contemporaneous record of your gambling activity throughout the year. The agent told me that in the absence of a detailed log, having other supporting documentation like bank records, casino reward card statements, or even consistent witnesses can help your case.

I have to eat my words and apologize for being so skeptical about Claimyr. After my frustrated comment, I decided to try it myself since I was desperate to resolve my tax issue before filing this year. The service actually worked exactly as described. I didn't have to sit on hold for hours - their system did that part, and I got a call back when they reached an actual IRS agent. The whole process took about 35 minutes from start to finish. The agent I spoke with was incredibly helpful regarding my gambling loss documentation questions. They explained that while they do prefer contemporaneous records, they understand that not everyone keeps perfect logs. They said having the physical tickets, bank withdrawal records showing patterns of cash withdrawals near gambling establishments, and even a log created after the fact with reasonable estimates can be acceptable in many cases. This saved me days of stress and uncertainty. Sometimes it's worth paying for convenience when dealing with bureaucracy.

I'm a regular gambler and itemize deductions every year. Here's what I do: I keep a small notebook in my car and immediately write down when/where I bought tickets, how many, and the total cost. Takes 10 seconds while sitting in my car. For online gambling, I save all the emails. When I win, I do the same thing - record it right away. By tax time, I've got everything organized by month. Been doing this for 7 years and was audited once - passed with no issues because my records were solid. Start doing this now for 2025, even if you decide not to claim the 2024 losses. Better to build the habit.

I went through this exact situation back in 2023. Won $8k on a scratch-off and had a bunch of losing tickets. I claimed about $4k in losses and got audited. It was mostly a mail audit where they asked for documentation. I sent them all my physical tickets plus bank statements showing ATM withdrawals near the stores where I bought tickets. I also created a spreadsheet estimating when I bought each ticket based on the game numbers and when those games were active in my state (you can find this info on most state lottery websites). They accepted about 80% of my claimed losses. They disallowed some because I couldn't reasonably prove they were purchased during the tax year in question. I had to pay a bit more tax, but there were no penalties because they determined I made a good faith effort.

Based on my experience as a tax preparer, I'd recommend taking a conservative approach here. While you can legally deduct gambling losses up to your winnings, the lack of contemporaneous records does increase your audit risk. Here's what I typically advise clients in your situation: 1. Create a detailed log now, even if after-the-fact. List ticket types, approximate purchase dates/locations, and organize them chronologically as best you can. 2. Gather supporting evidence: bank/credit card statements showing withdrawals or purchases near lottery retailers, any photos you might have of yourself with tickets, etc. 3. Consider the risk vs. reward. If your refund is already decent without claiming these losses, you might want to skip it this year and start keeping proper records going forward. If you do decide to claim them, be prepared to defend the deduction. Keep everything organized and easily accessible. The IRS typically looks for patterns of gambling activity that support your claimed losses. One more thing - make sure you're not double-counting. Only claim losses for which you have actual losing tickets, and don't estimate beyond what you can reasonably document.