Gambling Loss Deductions Before Filing IRS Winnings Report Permitted Under New WV Tax Law
A measure that would modify how casino and lottery wins and losses are taxed is in the process of being signed into law by WV Governor Jim Justice.
Citizens of WV are permitted under House Bill 2821 to subtract gambling losses from gains before paying state taxes. It enables taxpayers who submit simple tax returns to write off gambling losses in the same way as those who claim itemized deductions.
Regrettably, losses must be recorded in great detail throughout the year since they cannot exceed profits.
Gambling and lottery winnings are taxed as personal income. For computing earnings for tax years starting on or after January 1, 2023, the taxpayer can deduct lottery and gambling losses up to the amount won for that year, but they cannot be deducted for the costs and expenses related to the gaming and lottery activity. If the taxpayer wants to claim losses as a deduction, they must keep thorough documents proving those losses. It is the taxpayer’s responsibility to demonstrate any damages.
So, before filing their taxes, gamblers may now subtract their losses from their gains. Thousands of WV taxpayers may have less tax due as a result.
The sum of the losses cannot be more than the sum of the profits. Also, participants are responsible for keeping thorough records to support their losses.