‘Professional Gamblers’ To Claim Tax Expenses
Gambling is now being recognized by the Federal Government as a profession. This means that if you are a ‘Professional Gambler’ you are able to deduct tax for any business expenses. However, in order to be considered as a ‘Professional Gambler’ the Internal Review Service (IRS) has laid down a few stipulations which an individual must satisfy. Basically, you need to prove that most of your income is derived from gambling. Each case will be considered independently by the IRS. In January 2011, amendments were made concerning what a legal deduction should be for a gambler by the US Tax Court. At first, it was only the winnings but now losses are also being taken into consideration.
This is to make a big impact on gamblers who travel worldwide in order to gamble. Now, if gambling is your job you will be able to deduct not only any travel costs but also any losses. Travel costs will also include any money spent getting to a racetrack or casino. As with any professional traveling this money will be deductable and can be written off. Gambling will be considered as a trade like any other.
The notion of making it a profession was first brought up back in 2001. Robert Mayo, himself a professional gambler, wagered $131,000 and ended up winning $120,000. When he wrote up his tax return he made sure to include his winnings, the difference between his wagers and also costs incurred by traveling in his car and race handicapping information. He listed approximately $11,000 in terms of expenses. When his case went to court the court recognized that these were business expenses and not costs due to wagering losses. The losses were simply considered as similar to company overheads.
Poker players have a lot of expenses for which they may have to pay substantial amounts of money. These include paying for flights to particular tournaments, fees for staying in hotels and money for meals. If a player has to fly abroad then these costs can quickly mount up. Therefore, this legislation will be a huge financial help.
The New Legislation
This new legislation will allow gamblers to go back as far as three years in order to claim their money back. On the tax form, you will be able to enter the information on Schedule C. For this year, this will need to be completed by April 18th. They will be able to receive money for business expenses as well as gambling loses. However, it is not believed that there will be a huge influx of people going for this. In addition, certain casinos already pay high rolling gamblers for any travel expenses.
It has been considered as a real victory for gamblers. It also allows more clarity in an area which was before unclear. Some tax workers were already taking these expenses but now they can be certain that this is legitimate.