Can I file taxes as a professional gambler this year?

**jimsmith** · 09-30-2018, 05:51 PM

This year I'm thinking about filing taxes as a professional gambler. I have other income sources but I've studied a lot on gambling and believe I'm skilled enough to have an advantage and be a pro long term.
The thing is I've had a pretty bad year so far and am down quite a bit, so my first year of filing will probably a loss.
If I file as a pro can I take this gambling loss against my other income?
Are there certain rules about filing as a pro gambler like you cannot file the first year if you have a loss?
thanks

**lij45o6** · 09-30-2018, 05:55 PM

Originally Posted by jimsmith

This year I'm thinking about filing taxes as a professional gambler. I have other income sources but I've studied a lot on gambling and believe I'm skilled enough to have an advantage and be a pro long term.
The thing is I've had a pretty bad year so far and am down quite a bit, so my first year of filing will probably a loss.
If I file as a pro can I take this gambling loss against my other income?
Are there certain rules about filing as a pro gambler like you cannot file the first year if you have a loss?
thanks

I would talk with a Tax Attorney or a CPA certified for US tax law if you have any legal questions.

**Three** · 09-30-2018, 06:42 PM

I think you have to declare yourself an S-corporation. I looked into a few years ao but the details are a bit fuzzy in my head so make sure you check it out for yourself. It may vary by state but for federal taxes the regs are probably universal.

**Midwest Player** · 09-30-2018, 07:01 PM

Originally Posted by Three

I think you have to declare yourself an S-corporation. I looked into a few years ao but the details are a bit fuzzy in my head so make sure you check it out for yourself. It may vary by state but for federal taxes the regs are probably universal.

You don't have to declare yourself to be an S-corporation to file as a professional. Filing as a professional gambler usually means filing as a business (Sch C). A lot of gamblers do it, but you have to have a profit motive and usually the IRS wants to see a profit in at least 3 out of 5 years. You have to play often and spend a lot of time at it. I would also consider time practicing and time reading books and time on blackjack forums as time devoted to your business.

**Three** · 09-30-2018, 08:18 PM

Originally Posted by Midwest Player

You don't have to declare yourself to be an S-corporation to file as a professional. Filing as a professional gambler usually means filing as a business (Sch C). A lot of gamblers do it, but you have to have a profit motive and usually the IRS wants to see a profit in at least 3 out of 5 years. You have to play often and spend a lot of time at it. I would also consider time practicing and time reading books and time on blackjack forums as time devoted to your business.

While I was advised this is technically true, I was told this would have a high IRS audit rate. I am no expert on any of this so maybe someone that is in the IRS or an tax accountant specialist can tell us.

**Midwest Player** · 09-30-2018, 10:56 PM

Originally Posted by jimsmith

If I file as a pro can I take this gambling loss against my other income?

Even if you file as a business, a gambling loss can only be deducted up to the amount of gambling winnings. For example, assume you won $10,000 for the year, but had gambling losses of $12,000 and gambling expenses of $1,000. The most you can deduct if you file as a business is the $1,000 business expense, and $10,000 of the $12,000 gambling loss. This was discussed years ago over on BJ21 with "MathProf" and "Chicago" who was a tax attorney.

In fact, I believe MathProf was very interested because this was one of the few years he had a gambling loss. If you are not filing as a business you have to claim the $10,000 as income and then deduct $10,000 of your $12,000 gambling loss as an itemized deduction and only if you itemize. You cannot deduct any other gambling expenses. I am no tax expert so take everything I say with a grain of salt, but I have read much over the years about this.

**Midwest Player** · 09-30-2018, 11:17 PM

Originally Posted by jimsmith

Are there certain rules about filing as a pro gambler like you cannot file the first year if you have a loss?

I don't think there is anything that says if you have a loss the first year you can't file as a business. A lot of start up companies have a loss when they first begin, but if you get audited the IRS will want to see if you have a profit motive and if you are really an advantage player. Can you back up your claim of being an advantage player with proof of any casino back offs? Sometimes the casino will send a letter saying you are not welcome anymore. I do think the size of the loss would be a large determining factor. If they look at your records will they see any improvement or are the losses so large they don't see any hope that you are possibly playing an advantage game. Again I'm no expert here.

If it was me, I would not file as a business my first year if I had a loss. However, things are very different this year with the large increase in the standard deduction making itemizing much harder to justify.

**Three** · 09-30-2018, 11:49 PM

Plus if you have a net loss in two out of three they are likely to decide you are not in it to make money. Being delusional doesn't count. They go by your results. Often business deductions are so generous that your taxable income is zero for certain endeavors. They don't consider that you are in that business for profit if you never have taxable income. Again I know what I have heard from accountants and IRS auditors. I never thought I would be repeating what I heard so it is a bit fuzzy. If I were to be considering this again I know the people I would talk to ignored to refresh my memory and learn about any changes in tax law. Many who used to itemize deductions will no longer be doing so under the new tax code because the standard deduction is so high now.

**21forme** · 10-01-2018, 07:09 AM

Though I've never used his services, a guy to talk to is Russell Fox. He's been on GWAE multiple times and sounds very knowledgeable and experienced with prof. gamblers. His web site is http://claytontax.com/nevada/

**Midwest Player** · 10-01-2018, 03:25 PM

Here is a good article on some of the changes in the tax law that affect gamblers. Some of the things I mentioned for professional gamblers are no longer true for 2018.

https://www.americangaming.org/sites...0Customers.pdf