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Can freelancers deduct are gambling losses deductible?

TL;DR

Gambling losses can be deductible, but only to the extent of gambling winnings, and they must be itemized on your tax return.

Detailed Answer

Freelancers can deduct gambling losses, but only if they itemize deductions on Schedule A of their tax return. The losses can only be deducted up to the amount of gambling winnings reported as income. This means if you have $5,000 in gambling winnings, you can deduct up to $5,000 in losses. However, if your losses exceed your winnings, the excess losses cannot be deducted or carried forward. It's important to keep detailed records of both winnings and losses, including receipts, tickets, and any other documentation that supports your claims. Note that this deduction is not available on the standard deduction, and professional gamblers may have different rules under IRC §162.

Where to Put It on the Tax Form

Schedule A, Line 16

Real World Example

A freelance writer who occasionally gambles reports $3,000 in gambling winnings for the year. They also have $4,000 in documented gambling losses. On their tax return, they can deduct $3,000 of those losses, as this is the amount of their winnings, by itemizing deductions on Schedule A.

Audit Risk & Documentation Tips

The audit risk for gambling deductions is moderate. Taxpayers should maintain detailed records of all gambling activities, including winnings and losses. Keep all relevant documentation such as receipts, tickets, and statements from gambling establishments. It's also advisable to keep a gambling diary noting dates, locations, amounts won or lost, and the nature of the gambling activity.

IRS Reference

IRS Publication 529, Miscellaneous Deductions; IRC §165(d)

Relevant Industries

FreelancersIndependent ProfessionalsConsultants

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Disclaimer: This is for informational purposes only and should not be construed as tax or legal advice. Always consult your tax advisor.

Page created on July 25, 2025

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