The IRS Takes Gambling Record Keeping Seriously

Last week I stressed the importance of being prepared when tax season rolls along if you have gambling winnings to report. If you have kept the proper records and you are eligible to itemize, you will be able to offset gambling winnings on your federal return if you can prove losses up to but not surpassing the amount that you must claim as winnings.

IRS publication 529 gets down to specifics when it comes to the various forms of gambling income and what kind of record keeping is expected of players. Let's examine the six categories now in an effort to help you get better prepared for next tax season in case you haven't been diligent for 2000.

KENO: Copies of the keno tickets you purchased that were validated by the gambling establishment, copies of your casino credit records, and copies of your casino check cashing records.

This doesn't apply to patrons of Chicago-area riverboat casinos because the only keno that's played around here is in the form of electronic gaming devices. Traditional keno using numbered Ping-Pong balls is played in virtually every casino in Las Vegas. If you play the game during your Vegas vacations, don't crumple up your losing tickets and toss them. Keep all of your validated tickets just in case you ever hit the "magic numbers" so that you'll be able to prove losses against winnings.

SLOT MACHINES: A record of the machine number and all winnings by date and time the machine was played.

All of this information will be included on the Form W-2G that you are issued for a casino jackpot of $1,200 or more. But if you want to be real diligent, keep your own records of the data every time you win a substantial amount (in the hundreds of dollars). This additional information certainly can't hurt if you ever are audited.

TABLE GAMES: (twenty-one (blackjack), craps, poker, baccarat, roulette, wheel of fortune, etc.): The number of the table at which you were playing. Casino credit card data indicating whether the credit was issued in the pit or at the cashier's cage.

This doesn't apply to average players, but it certainly could impact high rollers. Again, if you are a recreational player who buys in for a hundred bucks or so, it can't hurt keeping your own diary of the date and time you played, the name of the casino, the game and table number, the amount of your buy-in and what you cashed out for.

BINGO: A record of the number of games played, cost of tickets purchased, and amounts collected on winning tickets. Supplemental records include any receipts from the casino, parlor, etc.

Here's a category that can hit home to a lot of folks in the Chicago-area, even if you don't go to casinos or the racetracks. Bingo for charitable purposes is legal in Illinois. It is played on a regular basis at many fraternal organizations, churches, and bingo parlors. If you're a serious bingo player and you want to be prepared in the event you ever win big, you'll thank yourself if you've kept proper records of your gaming sessions and saved the paperwork.

RACING: (Horse, harness, dog, etc.): A record of the races, amounts of wagers, amounts collected on winning tickets, and amounts lost on losing tickets. Supplemental records include unredeemed tickets and payment records from the racetrack.

The pari-mutuel form of wagering at racetracks makes record keeping easy. Simply make a habit of stapling all of your losing tickets, winning receipts, and all other paperwork associated with your day at the races to that day's official track program and keep a file of them. The IRS will be happy and you'll be prepared when the time comes for you to prove your claims with documentation. Advances in betting technology make this task much easier today than years ago.

Don't make the mistake of scooping tickets up off the floor the moment you've won a big bet. The IRS will be wise to this one. If you have kept your programs and attached your own losing tickets and not ones with dirty shoe prints on them, you'll be in good standing.

LOTTERIES: A record of ticket purchases, dates, winnings, and losses. Supplemental records include unredeemed tickets, payment slips, and winnings statements.

If you play the lottery with any degree of regularity, make a habit of not throwing away your losing tickets, including instant scratch-off tickets, daily game tickets, and Big Game and Lotto tickets. Just tuck them away in a manila envelope and save them for a "rainy day" -- the day it rains greenbacks, that is!

The IRS cautions that its record keeping suggestions are intended as general guidelines to help you establish your winnings and losses. They are not all-inclusive. Your tax liability depends on your particular facts and circumstances.