Summer Tax Series Part 2: Review Recordkeeping Practices

The summer offers both taxpayers and tax professionals an opportunity to revisit their tax situation. As part of the ongoing series, I will highlight steps to take throughout the summer to best prepare for the second half of the year.

Whether you are filing as a professional or recreational gambler, you must keep record of your play. If you do not have a recordkeeping process in place, now is the best time to start documenting your play in a systematic fashion. If you already have a recordkeeping process in place, it is always beneficial to review your current process and evaluate it for potential improvements.

What to Track

As a gambler, you are required to keep a log of your gambling activity. This log should track the following for each gambling session:

• Date

• Location

• Game Type

• Duration

• Session win/loss

• Any other details that you wish to include to increase the reliability of your log

How to Document Gambling Activity

There is no IRS mandate surrounding the form of your gambling log. You may keep your gambling log in any manner that is most suitable to your needs. As long as your log is kept contemporaneously and tracks the relevant information above, any of these methods are an acceptable form of records:

• Handwritten journal

• Digital spreadsheet

• Notes on phone

• Poker or bet tracking app

Not only will your records serve as documentation to support your tax return, but you can also use them to accurately reference your year-to-date net profit or loss.

Record Retention

While your gambling log is your primary source of documentation, you should also systematically store any supplemental documents that substantiate your log. This can include:

• Form W-2G or 1099-MISC

• ATM deposit/withdrawal records

• Win/loss statements

• Players card history

• Hotel receipts

The above documentation won’t necessarily have any standalone value, but it can be used to substantiate your log and level of play throughout the year. I always recommend keeping digital copies of any relevant documents. This allows for easier storage and availability if needed.

Business Accounts

If you are filing as a professional gambler, you are stating that your level of play rises to that of a business. As with most businesses, it is recommended to open a separate bank account and credit card for your gambling activity. This will prevent the commingling of business and personal transactions and make it easier to maintain accurate business records.

If your recordkeeping has not been up to par, the summer is a great opportunity to implement a system that works for you.