Can I Write This Off?

Is are gambling losses deductible a business expense?

TL;DR

Gambling losses are not deductible as a business expense for most taxpayers; they are generally deductible only to the extent of gambling winnings and must be itemized on Schedule A.

Detailed Answer

Gambling losses can only be deducted if you itemize your deductions on Schedule A and only up to the amount of your gambling winnings. This means if you have $5,000 in winnings and $7,000 in losses, you can only deduct $5,000. For professional gamblers, gambling losses may be considered a business expense and reported on Schedule C, but this requires meeting strict criteria that demonstrate gambling is their primary source of income and that they engage in it with regularity and continuity. Hobby gamblers cannot deduct losses as business expenses.

Where to Put It on the Tax Form

Schedule A, Line 16 for itemized deductions; Schedule C for professional gamblers.

Real World Example

A professional poker player who earns $100,000 from tournaments and incurs $80,000 in losses can report the $100,000 as income on Schedule C and deduct the $80,000 as business expenses, assuming they meet the IRS criteria for a professional gambler.

Audit Risk & Documentation Tips

Audit risk is moderate to high, especially for those claiming professional gambler status. Taxpayers should keep detailed records of all gambling transactions, including receipts, tickets, statements, and logs of winnings and losses. Professional gamblers should also maintain evidence of their gambling activities as a business, such as a business plan, records of time spent, and any promotional activities.

IRS Reference

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

Relevant Industries

Professional GamblersCasinosEntertainment

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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 15, 2025

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