My husband is a lousy gambler, but he insists that he can deduct his thousands of dollars of losses from our joint tax return. Is this true?

No. It's a common misconception among gamblers that their losses somehow have a silver lining, in that they can be deducted from their annual tax returns and result in a lower tax bill. The government may be big, complex, and inefficient, but it's not stupid. The fact is, you can only deduct gambling losses in certain circumstances, which will have a net effect of exactly zero on your tax return.

Here's how it works:  If your husband has an exceptionally good year and wins a total of $10,000 in Las Vegas, he can deduct any losses up that amount (but only if he maintains careful documentation; it's easy for gamblers to claim losses that don't actually exist). So, if he can prove that he lost $9,500, he can deduct that from the $10,000, leaving a net gain of only $500. On the other hand, if your husband won exactly zero dollars in Vegas and incurred $10,000 in losses, that's his (and your) tough luck. He can't deduct that amount from your joint tax return.

What will happen if, despite your protests, your husband still attempts to deduct his gambling losses without any offsetting gambling winnings? Well, at the very least, you'll face a potential audit by the IRS. If the amount involved is excessively large, you may be on the hook for back taxes and potential penalties. That's why, if you're an Oklahoma gambler (or simply married to one), you should consult the Oklahoma tax attorneys at Travis W. Watkins, PC (800-721-7054) for a free consultation as soon as possible.