First problem: identifying taxes on gambling winnings is a complicated subject. Second problem: Current tax code is often modified each year. So, if you are a regular gambler, discussing with your accountant or CPA each year is important.

One basic principle is pretty much engraved in stone: All citizens of United States who win money at gambling must pay winning taxes. So never assume -like many misinformed gamblers – that a gambling income is exempt. As a matter of fact, currently U.S. citizens can estimate forking over twenty-eight percent of their winnings to US Government. (Non-resident aliens typically pay thirty percent.) Proper tax preparation should separate the wins from the losses. Certainly, you have to think about your losses, too, but it does not mean you’ll get a great tax return in a losing year. In reality, a recreational gambler may only deduct financial losses up to the amount of his total winnings for the year.

For most recreational casino visitors, there aren’t many methods to reduce taxes on their winnings. If gambling is a spare-time activity, which is true most of the time, then they can’t deduct an expense – only your losses. Pro gamblers are allowed to deduct expenses, but a strict list of requirements forbids all but a small number of diehards to be treated as professional gamblers.

The only tax-reducing instrument for recreational players is a record of gambling activity. Since you can only subtract substantiated losses, you need to be able to confirm your losses in order to subtract your wins.