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Not claiming gambling wins and losses could cost you later

When the ball dropped on New Year's Eve it signaled new beginnings for a lot of people across the nation. But for workers at the Internal Revenue Service, 2014 means a new tax season as well as new tax audits. While we hope that residents here in Georgia will not run into problems with the IRS down the road, we know that this isn't always possible, especially because of how complex the tax code is. One such issue that can arise has to do with your gambling wins and losses and whether you claim these on your taxes -- a must have some would say, if you don't want to face tax penalties down the road.

According to the IRS, gambling winnings are fully taxable and must be reported on your tax returns, even if you're just a casual gambler. Gambling income can include everything from a simple raffle to winning the Mega Millions, as one Georgia resident learned recently when she stepped forward to claim one of two winning tickets. Although her chances of winning were estimated to be approximately 1 in 259 million, her gamble paid off and after taxes, she's expected to claim about $123 million.

But although it may seem obvious that she will have to claim these winnings on her taxes, even small wins and losses should be accounted for on your taxes, says the IRS. On the government agency's website, the IRS suggests that people keep a record of gambling winnings and losses, in part because along with claiming winnings, a person can also deduct losses on their taxes as well.

While many people across the state of Georgia, as well as others across the nation, might find this form of record keeping tedious, it can be incredibly beneficial, especially if the IRS calls into question any discrepancies in your earnings for the year. As some of our blog readers might know from personal experience, not having proper records of gambling winnings and losses can lead to tax disputes and even litigation. And without the help of a skilled tax attorney, a person might feel overwhelmed or even frustrated by the difficult process that lies ahead of them.

Sources: Forbes, "Everybody Wins! Lotteries Like Mega Millions Benefit Taxpayers, Seniors, Schools & More," Kelly Phillips Erb, Dec. 18, 2013, "Topic 419 - Gambling Income and Losses"

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