Yo! -- It's getting close to tax time -- know the rules if you gamble

22 January 2009

By Howard Schwartz

It's that time of the year, the time most Americans start thinking about gathering all their receipts, W2s and 1099s for that April tax date known as The Deadline. If you won some money in 2008 at video poker, on the slots or at the track, for example, and you wonder if the Internal Revenue Service knows or needs to know. The old pro may know the rules, but newcomers to gambling -- including lottery winners, poker tournament players and even bingo aficionados -- probably have some questions.

I know -- you're busy and you'll check with a tax preparation service, Cousin Moe or the guy at the barber shop when you get time. Dangerous move, especially when you cut it too close, have a habit of forgetting or get misinformation from guessers who can get you into trouble down the line.

In honor of those procrastinators or those in the dark, several books are available to guide you in the right direction. Here's a short list of valuable resources you may wish to refer to before signing your tax form and mailing or e-mailing it in:

The Gambler's Guide to Taxes by Walter Lewis (159 pages, paperbound, $12.95). Published in 2003, it is subtitled "How to Keep More of What You Win." The author, a certified public accountant, has prepared a step-by-step guide to help every gambler minimize tax penalties of both winning and losing. His advice is for people who play and kind of gambling games from casino offerings to pari-mutuel bettors, even sweepstakes winners. He explains the best way to report winnings and substantiate losses and outlines financial advantages of becoming a professional gambler. The book includes sample forms to become familiar with and details gaming withholding and reporting thresholds.

Tax Help for Gamblers -- Poker and Other Casino Games (167 pages, paperbound, $24.95) by Jean Scott and Marissa Chien). Published in 2007, it discusses gambling wins as income; online gambling; taxes, the law and the courts; plus IRS guidelines for player record-keeping. Samples of how Scott, a co-author, keeps records are reprinted. One valuable section is devoted to casino comps and gifts, plus cashback and free play followed by casino tournaments and drawings. The book points out the difference between a "recreational gambler" and a professional and covers the issues for non-U.S. citizens who are winners. There are 17 pages devoted to advice for the poker player, and information about what to do if you're audited. Some states have withholding taxes as well on gambling winnings -- the book outlines each state. A final section outlines legal precedents and offers examples of sample tax forms it's important to know about.

How to Turn Your Poker Playing into a Business by Ann-Margaret Johnston (122 pages, paperbound, 19.95). Published in 2005 by a CPA from Georgia, this title book concentrates only on poker in more than a dozen chapters including comparing a hobby to a business; how missing a deduction can cost you; detailing your travels by car; looking at travel, entertainment and meals; and keeping excellent records while answering some of the most commonly asked questions. The book includes many sample forms you may have to deal with and contains a glossary of terms worth remembering.

The Ultimate Poker Journal by the Comyn Group (106 pages, plastic spiralbound, $24.95) allows the recreational or professional gambler to log his or her action year-round, for poker cash games, multi-table tournaments and sit 'n' go tournaments. Despite the word poker in the title, the book also serves as a record keeper for blackjack, craps, video poker or table games. It allows you to document expenses and track your performance via wins or losses, expenses, hours played, dates and places and to show fluctuations in your bankroll. This kind of record-keeping is what the IRS requires for players to establish the legitimacy of their deductions and can serve as an extremely valuable asset should there be any questions come audit time.