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 natptax.com/explore.
About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing.