How to properly deduct gambling losses on my federal tax return?

So the way gambling losses work on taxes is a bit tricky. You can deduct your gambling losses, but only up to the amount of your gambling winnings. The IRS doesn't let you deduct losses beyond that point. Here's what you need to do: You'll report ALL of your gambling winnings ($520k) as income on your tax return. Then you can deduct your losses ($595k) as an itemized deduction on Schedule A, but only up to the amount of your winnings. So you'd only be able to deduct $520k of your $595k in losses. That means the $75k in excess losses unfortunately can't be deducted or carried forward to future years. That's just how the tax code treats gambling - you have to report all winnings but can only deduct losses up to those winnings. Make sure you have good documentation of both your wins and losses. Keep a diary of gambling activities, receipts, tickets, statements from casinos, etc.

After dealing with this exact situation last year, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out my gambling deductions correctly. I was confused by all the rules about itemizing and documenting losses, but their system analyzed my situation and showed me exactly how to report everything properly. They have this specialized feature that helps organize gambling documentation requirements - especially helpful if you have lots of sessions like you do with over $500k in transactions. It automatically flagged potential audit triggers in my reporting and showed me exactly what documentation I needed to maintain to support my deductions.

Just wanted to update on my gambling tax situation. I tried that taxr.ai site mentioned earlier, and it was seriously helpful. My situation was similar to yours - about $480k in winnings and $540k in losses across hundreds of sessions. The system organized all my sessions by location and game type, which was a game-changer. It flagged that I was missing documentation for about $42k in losses that I would have otherwise claimed. Turns out some of my online poker sessions didn't have proper records! The system generated a complete gambling log that satisfied IRS requirements, which my regular tax software never would have done. Definitely worth using if you've got complex gambling activity like we do.

If you're planning to claim significant gambling losses, be prepared to potentially get audited. Last year I tried for MONTHS to reach the IRS to discuss my gambling deductions before filing and it was impossible. Then I found https://claimyr.com and used their service to get a callback from the IRS in under 2 hours. You can see how it works here: https://youtu.be/_kiP6q8DX5c I had specific questions about documenting my casino sessions and player's card statements, and getting actual clarification from an IRS agent was incredibly valuable. Much better than guessing or getting conflicting advice online. Given your situation with large winnings and losses, I'd recommend getting official guidance before filing.

I need to eat my words and apologize. After my skeptical comment, I was so frustrated with my own tax questions about gambling losses that I decided to try Claimyr as a last resort. Holy crap, it actually worked. The IRS called me back in about 3.5 hours. The agent confirmed that with gambling losses like we're discussing, you absolutely need session-by-session documentation - not just bank statements showing withdrawals at casinos. She explained exactly what I needed to avoid red flags on my return. Given how much money you're dealing with, getting direct confirmation from the IRS before filing could save you massive headaches. I'm genuinely shocked this service worked after months of failed attempts on my own.

Just want to add that you MUST itemize deductions to claim gambling losses. If you take the standard deduction, you can't deduct your gambling losses. But you still have to report all your gambling winnings as income either way! This is another reason the gambling tax rules suck - if your other itemized deductions plus gambling losses don't exceed the standard deduction ($13,850 for single filers in 2024), then you're basically paying tax on your gambling winnings while getting nothing for your losses.

If you're going to claim large gambling losses, make sure you've got really solid records. I'm talking: - Session logs with dates, locations, start/end times - ATM withdrawal receipts from casinos - Casino win/loss statements - Tickets and receipts - Player's card statements The IRS loves to audit gambling loss deductions, especially big ones like yours. My brother got audited last year over $32k in gambling deductions and they made him produce documentation for EVERY SINGLE SESSION.

This is a complex situation and I'd strongly recommend consulting with a tax professional who specializes in gambling taxation. With $520k in winnings and $595k in losses, you're dealing with significant amounts that will definitely draw IRS attention. A few key points to consider: - You'll need to report the full $520k in winnings as income - You can only deduct losses up to your winnings ($520k), so $75k in excess losses can't be deducted - You must itemize to claim gambling losses - make sure this makes sense vs. taking the standard deduction - Documentation is absolutely critical with these amounts The IRS scrutinizes large gambling loss deductions heavily. Make sure you have detailed session logs, casino statements, receipts, and can substantiate every dollar claimed. Consider getting a professional review of your documentation before filing to avoid potential audit issues down the road.

I've been through a similar situation with large gambling losses, and I can confirm everything others have said about the documentation requirements. The IRS is incredibly strict about this. One thing I haven't seen mentioned yet - if you're planning to claim these losses, you should also be prepared for the possibility that your return might be selected for additional review even before any formal audit. With $520k in gambling winnings reported, your return will likely get flagged for manual review during processing, which can delay your refund significantly. Also, make sure you understand the state tax implications in your state. Some states don't allow gambling loss deductions even if you can claim them federally, which could create an additional tax burden. Given the complexity and the amounts involved, I'd really recommend finding a CPA or tax attorney who has specific experience with gambling taxation. The general tax preparation places usually don't have the expertise to handle situations like this properly, and mistakes could be very costly with these dollar amounts.