Details are so important in life; many times people are too lazy or too overwhelmed to be thorough with details all the time. Many taxpayers pay hefty fines and losses because of this mentality. Taxpayers that have gambled through the year need to claim that activity in their taxes each year. This is not an option; the IRS can audit and possess assets to recoup unpaid winnings from gambling, prizes and lotteries. Gambling is mostly illegal throughout the country so it only makes sense to know the law if you decide to gamble.
Know the Law
Gambling laws in the United States are tricky for most people to understand. Gambling in the United States has become a game of risk in itself for most taxpayers. Gambling is illegal in almost every state except Las Vegas and other select locations. Of course, you also have the option to play games like blackjack and poker legally online. If you do make sure that you know what you are doing. Many people take part in illegal gambling every day, unaware they can be arrested, fined or audited at any time. Gamblers are also required report all income and activity throughout the year on their taxes to the IRS. Failure to do this could compel the IRS to audit your financial records going years back looking for unclaimed incomes.
Know Your Taxes
The IRS expects all gamblers to keep track of their legal gambling transactions. The IRS advises taxpayers to keep a log and record every gambling session during the year. Taxpayers should keep track of their winnings or losses, the location, the gambling establishment, the time, day and any other pertinent information.
The log will be the proof of record for your transaction; the IRS puts the burden of proof on the taxpayer. Being ignorant of the total gambling income does not make the taxpayer exempt from paying the proper amount. The IRS also allows gamblers to claim a credit for losses up to the total for the taxpayers gambling income. This is a great way to save on at least a lit bit of money loss each year. The bottom line is to know what you are doing (even check the wiki if you have to!) and keep stringent records to back it up.