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1/24/2012
Travis Watkins
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IRS Folds on Professional Gambling Expenses

The IRS knows when to hold 'em and when to fold 'em when it comes to professional gambling expenses.  Gamblers have always been able to offset gambling losses against winnings.  Professional gamblers, though, have historically been able to use mileage, food and lodging as losses to offset winnings.  However, they have never been able to go below zero.  In other words, you could never expense more than your winnings.

Now, bowing to pressure, the IRS will allow gamblers to list these gambling expenses on Schedule C of their 1040 tax returns.  A word of caution, though: this is only for "professional gamblers," not recreational ones.  Another word of caution: this only applies to LEGALIZED gambling.

So, who is a professional gambler under the IRS code?  The answer is, it's complicated.  But, if you are interested in the IRS particulars, give me a call at 405-607-1192.  Generally speaking, if you derive the majority of your income from gambling and it is your intent to make your living in this manner, you fit the bill.  

Caveman gamblers

The down-side is that professional gamblers have to pay self-employment tax (15.3%) in addition to personal income tax.  Oh, that, and the likelihood of losing your shirt, of course.  Happy gaming!   


Labels: expenses gambling IRS losses professional self-employment tax taxes Travis Watkins winnings

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