How to Prove Gambling Losses in 2025 – A Complete Checklist

Gambling is an increasingly popular pastime in the USA and beyond because of how fun and thrilling it can be. However, players shouldn’t forget that gambling is more than a hobby – it is a real money game and, as a result, is fully taxable. Luckily, certain amounts of losses can be deduced from one’s taxes. Perhaps now you’re wondering how you can prove gambling losses on your taxes, here are some things to keep in mind.

Keep a Gambling Diary to Track Gambling Losses

Keeping a track of your gambling winnings and losses is an important part of being a gambler. If you know how to prove gambling losses, you can get various financial incentives from your tax office and even use gambling losses in bankruptcies.

Keeping a gambling diary, and specifically, tracking your gambling losses is a powerful tool in obtaining deductions of what you owe to the state or federal government at the end of the tax year. Therefore, many gamblers want to make sure they know how to prove gambling losses to the Internal Revenue Service (IRS) or any tax office around the world. Thankfully, none of this is too complicated, but each jurisdiction has its own specific guidelines.

Deductions sound great, but they are only available if you have done your taxes right. In other words, you need to itemize your deductions on a Schedule A (Form 1040 or 1040-SR) so that the IRS will have an easy time reading through it. The winnings go under “Other income” while losses up to the amount of winnings have to be reported as “Other itemized deductions.” Proving gambling losses on tax starts with a proper itemization of your deductions.

Track Your Winnings and Losses by Gambling Category

The first thing you need to do is have a detailed, accurate, and factual overview of every gambling win and loss you have registered or incurred. It is imperative to keep track of losses and winnings separately. You should report the full amount of your winnings as income before claiming gambling losses up to the amount of the winnings as an itemized deduction.

• Casino games and slot machines
• Poker games
• Sports betting and fantasy sports
• Lotteries
• Bingo
• Raffles
• Horse and dog races

If you are just learning how to prove gambling losses, you should keep in mind that according to the IRS, deductible losses include not only the cost of the wagers themselves but also the expenses related to placing the wager, including the price of traveling to and from the gambling venue.

Those who know how to prove gambling losses would tell you that the tax office, whether it’s the IRS or some other institution, would expect you to keep a track of your activities day by day.  You’d do best to keep an accurate date of when the gambling activity took place and what the outcome was. You also must add the address of the venue as well as the names of the people with whom you gambled. Put another way, you will have to offer a detailed breakdown of the:

• The date and type of your specific wager or wagering activity
• The name and address or location of the gambling establishment
• The names of other persons present with you at the gambling establishment
• The amount(s) you won or lost

The more transparent you are, the easier it becomes to claim deductions. Most tax offices will be happy to assist you on the condition that you have provided all the details and that there are no discrepancies in the documents you have submitted.

The Internal Revenue Service will most likely vet the people whom you have gambled with and named in your gambling diary, so make sure everyone is on the same page and has reported their gambling winnings and losses. Not reporting gambling winnings may have unpleasant consequences.

How Do I Prove My Gambling Losses on My Taxes – Documents Needed

It’s important to keep track of all official documents you receive as part of your gambling experience at a casino or sportsbook, or another licensed venue. This documentation may include, but isn’t limited to:

• Form W-2G (issued by the payer)
• Form 5754
• Betting tickets
• Canceled payments or bets
• Credit records and bank withdrawals
• Receipts from gambling facilities

It’s also good to know what you can expect when visiting a legitimate gambling establishment in the United States. Since you will need to know how to prove gambling losses, you will need the proper paperwork. The payer must issue a Form W-2G, Certain Gambling Winnings, that is if you receive, as the IRS explains, “certain gambling winnings or have any gambling winnings subject to federal income tax withholding.”

Once again, keep in mind that the amount of your deduction cannot be greater than the amount you have reported as gambling income.

Reporting Winnings and Losses as a Nonresident of the United States

Thankfully, there is a solution pretty much for everything when it comes to reporting tax money in the United States. If you’re wondering how to prove gambling losses as a nonresident, all you need to do is use the appropriate form, i.e. Form 1040-NR, U.S. Nonresident Alien Income Tax Return. However, keep in mind that nonresident aliens usually cannot deduct losses unless they are residents of Canada.

Sources:

• https://www.irs.gov/publications/p525#en_US_2021_publink1000229545
• https://www.irs.gov/help/ita/how-do-i-claim-my-gambling-winnings-andor-losses
• https://www.irs.gov/publications/p529
• https://www.irs.gov/taxtopics/tc419