In this episode of ‘Dr. Friday Tax Tips – One Minute Moment,’ Dr. Friday addresses the critical aspect of deducting gambling losses on your tax return. She highlights that gambling losses can only be deducted up to the amount of gambling winnings, emphasizing the importance of keeping thorough records of all gambling activities. Dr. Friday shares a cautionary tale of an individual who won a million dollars but failed to save his lottery tickets, resulting in an inability to deduct his losses and facing significant tax liabilities. Additionally, she reminds listeners that gifts to family and friends from winnings are not tax-deductible, underscoring the importance of tracking and documenting gambling expenses meticulously to avoid unexpected tax payments.
Transcript
G’day, I’m Dr. Friday, president of Dr. Friday’s Tax and Financial Firm. To get more info, go to www.drfriday.com. This is a one minute moment.
Let’s talk about gambling losses. Gambling losses and expenses are a deduction only to the extent of gambling winning. So if you’re not making money, guys, that loss is not something you’re going to be putting on your tax return. And if you did win the lottery, you better have saved all of your lottery tickets the entire time of your life, because that’s the only time you’ll be able to run it off up to whatever you may have won. So I had a guy that won a million dollars last year. It was great. It was wonderful. He did not save one lottery ticket. Decided to gift a lot of it to family and friends, which is not a tax deduction. So paying taxes is what he’ll be doing, and so will you if you don’t track your expenses.
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