What must taxpayers do to deduct gambling losses?

To deduct gambling losses, taxpayers must keep a detailed log of their winnings and losses. This documentation is crucial because the IRS requires that taxpayers provide a record to substantiate their claims for deductions on their tax returns. The log should include information such as the date of each gambling session, the location, types of games played, amounts won, and amounts lost.

While reporting winnings as taxable income is also necessary, that does not qualify a taxpayer to deduct losses. Instead, it is imperative to have accurate records to support the losses claimed, as the losses can only be deducted up to the amount of gambling winnings reported. Therefore, maintaining an organized and thorough log of gambling activities is essential for accurately reporting income and documenting deductions.