Thursday, May 13, 2010

How do married couple file joint tax return if both are gambler?

Assume that my wife gambles to the same extent as I do. Also assume that we file a joint tax return. If my wife has a large net gambling gain for the year and I had a large net gambling loss, can we combine our gambling transactions and use his loss to offset her winnings? What are the IRS laws that apply?How do married couple file joint tax return if both are gambler?
Each of your winnings and losses stand on their own. The combined winnings go on line 21 of Form 1040. Each of you then figures your portion of deductible losses limited to your actual winnings and the total goes on Schedule A as a miscellaneous itemized deduction. This misc deduction is not subject to the 2% floor.





Keep in mind that the IRS is likely to audit your return. They will expect to see detailed records and receipts for all gambling activity. Your records must include all gambling sessions, casino name and address, machine or table numbers, etc.





Example:





You: Won $20k %26amp; lost $50k.


Wife: Won 100k %26amp; lost 20k.





Gambling winnings on line 21: $120k


Schedule A loss: $40k. $20k for you (limited to your winnings.) and $20k for wife (her actual losses since her winnings were higher.)How do married couple file joint tax return if both are gambler?
Bostonian's answer is correct except for the calculation.Per Treasury Regs. Sec 1.162-10 wagering losses of spouses can be combined:





';Losses sustained during the taxable year on wagering transactions shall be allowed as a deduction but only to the extent of the gains during the taxable year from such transactions. In the case of a husband and wife making a joint return for the taxable year, the combined losses of the spouses from wagering transactions shall be allowed to the extent of the combined gains of the spouses from wagering transactions. ';
Check publication 17 under under misc itemized deductions. It addresses that issue nicely. Also JK Lasser ';Your Income Tax'; also addresses it nicely.
IRS tends to audit returns where you list your occupation as gambler. Be sure you have the proof of gains and losses saved.


There are many online sites about ';professional gamblers'; but many have doubtful advice included


IRS allows on joint returns, combination of your wins and losses.


Get yourself a Pub.17, free from government and then read up on gambling.

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