So do you claim the losses at audit? I don’t know. Depending on how often you actually engage in this kind of behavior, this could be a concern. Diaries and annotated financial records may qualify as sufficient, depending on how thorough they are.ģ, All of this said, reporting any illegal income or losses on a tax return can generate a road map for any authorities that could choose to investigate. So, you’ll only be able to claim up to your winnings (sounds like $60,000) as a loss in the best case scenario.Ģ, To claim gambling losses, you need have sufficient records of your losses. Just as gambling winnings are taxable – even if gained illegally – gambling losses are similarly deductible as a miscellaneous deduction, no matter how obtained, to the extent that they don’t exceed your winnings. That said, to allay some of your immediate fears, here are some thoughts:ġ, Gambling losses are deductible. So promise me you’ll get some help, okay? You really need some guidance about your specific situation – with all of the facts and circumstances laid out for analysis. I say this because: (a) I’m not your lawyer and (b) even though I have some thoughts for you to consider, this isn’t legal advice. Thank you.īefore I even begin to answer this question, I am going to tell you to talk to a lawyer. I am fearing jail very much, please give me your incite. I lost the money I won and have nothing to show for this (such as new house, car, etc). Would the IRS have leniency towards me since this was my first time? Would they consider my plea that I did not know how to file the losses? Would the penalty we jail AND money owed or only one of them? I am very scared because I did not be this intentually or willfully try to evade paying taxes. I am a 27 year old school teacher who has no record and has steered clear of crimes.

I am currently wondering what penalities would be assessed if I were charged with about 50,000 dollars in unpaid taxes. During this year I did not know how to show my losses to the bookie. The government can tax any income even if its illegal, but I did not know how to report my illegal gambling losses. My problem is that I showed a profit online but when I lost the money through the bookie, since this illegal, I did not know how to report it. I had about ~$50,000 in profit from this online poker but I had lost over $75,000.00 in Las Vegas and through a sportsbetting through a bookie. I did not file these returns for the sole purpose that my losses outweighed the winnings.

I am being looked into (audited) for tax evasion for 2006 where I failed to file tax returns for online poker winnings of about $60,000.00.

Hello, I would like to ask some questions about tax evasion and honest mistakes:

Gambling winning reported to irs