Gambling tax tips every pro should know

With the continued spread of sports betting and online gambling across the United States, an increasing number of tax pros are working with clients who have winnings and losses.

Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.   

Q: If a taxpayer stays at a resort for three days, can that be considered one session, or is it broken up into days?

A: Under Notice 2015-21, it cannot be treated as one session because a session must end each day at 11:59 p.m.

Q: Should a professional gambler use Schedule C to file their taxes? Are they subject to self-employment (SE) tax?

A: Yes, they should report their gambling income and losses on Schedule C (Form 1040), Profit or Loss From Business. They are subject to SE tax.

Q: Under the sessions method, can taxpayers mix gambling activities (e.g., poker, slots, and craps) in one session?

A: No. Taxpayers can only use the sessions method for electronically tracked slot machine play.

Q: Can professional gamblers take gambling losses in excess of winnings?

A: No. Gambling losses are limited to gambling winnings under §165(d), even if the taxpayer is a professional gambler.

To learn more about the tax consequences of gambling you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial at go.natptax.com/explore.