That trip to Las Vegas or Atlantic City may not be as bad as you thought!

While it is possible to deduct the gambling losses, it’s actually not all that easy to do it.  First, you can only deduct up to the amount of your gambling income reported on your return. All gambling winnings are fully taxable, by the way. The casino or gambling venue should provide you with a FORM W-2G that indicates the amount of your winnings and the amount of tax that was withheld before you took your winnings.  You must claim it on your tax return regardless if you paid estimated tax withholdings at the time of the win or not- but there is a line to indicate how much was already paid in taxes, if anything.

You also need to have receipts to show how much you spent (how much money you lost in gambling) and how much you won if you hope to deduct your gambling losses. 

If you were lucky enough to win some money on the slot machines, playing cards in a casino, or on horse racing for example, you are supposed to claim the winnings as gambling income on IRS FORM 1040.  This increases the amount of taxable income you earned during the year, so in order to reduce the amount of taxes you pay on your winnings (and your income in general) you can help offset the amount by claiming your gambling loss deduction on a FORM 1040, Schedule A.

Since any online casino is currently not legal in the United States, those losses are not tax deductible.

Your Gambling Losses May Reduce Your Taxes was created by and is property of American Consumer News.