Your Slots Gambling Records for Income Tax Returns

Introduction to Slots Gambling Records

Do you keep slots gambling records? According to my recent survey, less than half of you (41%) keep them. Well, it’s too late to start for 2020 income taxes, but not too late for 2021!

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Please contact an income tax professional to confirm my suggestions you implement as I am not an income tax professional.

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Making a Case for Keeping Slots Gambling Records

Gambling record-keeping is a tool. You may not yet use this tool. However, you should. Why? Because my educational slots channel is showing you how to win at slots. And not to be too arrogant about it, I’m a good enough teacher that I expect you to succeed.

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Do you itemize your tax deductions? Never mind, forget I asked because it doesn’t matter. Even if you don’t make enough annual income to itemize right now, get a medium-sized jackpot from slots and, BOOM, you can itemize deductions.

We are all self-taught at slots gambling, although I’m changing that for my audience of slots enthusiasts. If you’ve ever won an automatically taxable jackpot resulting in a U.S. Internal Revenue Service (IRS) Tax Form W-2G, you learned a lot when you prepared your annual income tax return.

I know I sure did!

I wish it wasn’t the case for slots enthusiasts, but learning is often painful. I guess it helps us remember the lessons of life. And one of them is: If you keep a gambling logbook, you can get those paid income taxes back.

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Why? How is this possible? The IRS allows you to deduct your gambling losses up to your winnings and, no, you don’t need to declare yourself a professional gambler to do it.

Anyone can do it. The income tax refund you get feels like a slots jackpot. IF THEY KEEP A GAMBLING LOG.

Win-Loss Statements from Players’ Clubs

For the IRS, there are two kinds of gambling records: primary and secondary. Win-loss statements from your casino’s loyalty program are secondary gambling records. They fall in the same category as bank withdrawal/deposits receipts or non-winning lottery tickets.

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Why are win-loss statements secondary in the eyes of the IRS? Because such statements often only have the difference between how much won and loss. That’s not good enough.

The IRS wants to know how much you won and loss. They’ll do their own subtraction, thank-you-very-much. They insist on it.

Win-loss statements are not consistent across loyalty programs. The players’ clubs of some of the biggest casino operators only provide a single number, the difference mentioned.

Yes, your loyalty club may provide itemized wins and losses by trip. But most do not provide any such level of detail. This lack of consistency makes the IRS insist on a primary gambling log rather than secondary information.

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What’s the point of keeping secondary information if a gambling log? Well, secondary income tax information like bank deposits, withdrawals, non-winning tickets, and win-loss statements are helpful (to you!) if audited by the IRS.

Federal Income Taxes

If you are a foreign national playing slots at U.S. casinos, it is quite possible you may pay no U.S. income taxes on gambling revenue. Given how many other countries are out there, and the tax laws for each, you’ll need to investigate your own countries tax rules for foreign income.

If you reside in the U.S., it is again possible that you don’t pay federal income taxes depending upon your income circumstances. For instance, your income may be less than the minimum for paying federal income taxes.

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On the other hand, like many gamblers and non-gamblers, you may regularly pay income taxes at the federal level and, early each year, prepare and file federal income tax returns.

This is when a gambling log is useful if itemized deductions are possible for your income circumstances. Hiring an income tax professional or using tax preparation software means it’s straightforward to implement gambling deductions. If you’ve kept a gambling log acceptable to the IRS, of course.

Keep in mind that paying federal taxes at the time of a jackpot win is optional. Everyone around me also winning jackpots at the time explained it usually comes out as a “wash.”

What they meant was: Along with gambling records, I wouldn’t have to pay ANY federal income taxes as I would be able to deduct up to my winnings.

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This unsolicited advice from fellow slots players late on a Friday night at my local casino included an assumption that slots players make little or no profit. I guess it was a reasonable assumption for them. It wasn’t for me, though.

If you’ve won an automatically taxable hand pay jackpot in 2019 or before, you’re likely had a painful education learning how to prepare and file your federal income taxes. And it may be that you did it right! But odds are, you didn’t know beforehand to keep a gambling log.

State Income Taxes

Every state has different state income tax laws for gamblers. This is when an income tax professional certified in your state’s tax laws comes in super handy. Or your state’s component for income tax preparation software.

Yet, your income could be below the minimum income level and you don’t pay state income taxes. Or perhaps you live in a state like Nevada that doesn’t tax gambling income at the state level.

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But, in most U.S. states, gambling income taxes exist and, as at the federal level, a gambling log is super handy to get back any taxes automatically paid at the time of your jackpot win. Unlike federal income taxes for jackpot wins over the taxable limit, state income taxes are typically mandatory.

As with federal income taxes, a U.S. state will accept a gambling log as a primary record for gambling wins and losses when preparing and filing annual income tax returns.

However, what if you reside in one state but gambling in another? What then? Well, this is where an income tax professional, or income tax preparation software, comes in very, very helpful. Of course, you’ll need to file another state income tax report if you gamble in another state.

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Furthermore, states can have different tax rules for non-residents. For instance, the state of Oklahoma limits gambling deductions for non-residents playing slots in Oklahoma who win an automatically taxable jackpot.

My best advice is to learn what to expect for the state or states within which you play slots.

Local Municipality Income Taxes

If you don’t have local income taxes, count yourself lucky. As a slots enthusiast, local income taxes can be a tough situation. Have you considered moving? I did.

If you live within a local municipality that taxes your income, don’t assume deductions are possible. They weren’t even a consideration in mine … before I moved outside of town and no longer had local income taxes.

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Let’s say that you won a bunch of hand pays at your local casino for a total of, say, $125,000. As winning high-limit players know, that’s not unreasonable. The trouble is, most slots enthusiasts spent every hand pay to pay for winning the next hand pay.

What does this mean? It means they typically have zero profit. And so, for federal and state income taxes when using an acceptable gambling log, they did indeed deduct their losses ($125k) up to their winnings ($125k) for … drumroll please … zero gambling income taxes. It was a wash.

But it was only a wash at the federal and state levels, as most cities don’t accept deductions on gambling income. Our hypothetical friend must pay local taxes on that $125k even though they spent it all gambling.

At a local income tax rate of 2%, that’s a $2,500 bill. Ouch! It can help offset this tax burden if you remember that casinos remove local taxes if THEY are in a local municipality.

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Oh, and did I mention that income tax professionals (or software) won’t help you with local income tax preparation? So, there’s that, too. Call it the cherry on top of your metaphorical tax sundae.

Keeping Slots Gambling Records

Keeping slots gambling records is easy and simple. It really is. Each time you visit a casino or spend money gambling, keep a log of these six items:

1. Date
2. Facility and Location (including state)
3. Amounts won, if any
4. Amounts lost, if any
5. The free market value of any complimentary gift from the casino.
6. The names of other persons with you.

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The three most difficult things you’ll need to do are:

1. Update your log each time you bet.
2. Don’t lose your log.
3. Take your log with you when you do your taxes.

Take it from me, I’ve had trouble with that last one.

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Otherwise, always make sure to check the IRS government website for new requirements on IRS-acceptable gambling recordkeeping. Here are a few articles the IRS recently updated:

• IRS Publication 529: Miscellaneous Deductions – Gambling Losses Up to the Amount of Gambling Winnings
• IRS Topic No. 419 Gambling Income and Losses
• Publication 505: Tax Withholding and Estimated Tax
• Publication 525: Taxable and Nontaxable Income

Purchasing Templates for Slots Gambling Records

Gambling recordkeeping are useful for more than income tax preparation records. They can also help you analyze your slots gambling performance year-round, provide a graph showing your progress, and as a place to keep notes on winning or losing slot machines casino-by-casino.

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I am offering Excel and CSV-formatted versions of simple, medium, and advanced gambling record templates along with printable PDF-formatted versions. Each template also includes integrated and stand-alone logbooks for complimentary gifts earned from your favorite casinos.

Summary of Slots Gambling Records

Do you keep slots gambling records? Why not? It’s simple. It’s easy. It’s too late for last year but not yet for this year. And remember to watch for updates from the U.S. Internal Revenue Service!

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Related Articles from Professor Slots

• Keeping Gambling Records for Tax Preparation and More
• How Do Slot Machines Pay Out Taxable Jackpots?
• Following Up on Three Slots-Related Topics (Live Q&A) – Part 3: Gambling Records

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