What strict requirement must taxpayers follow regarding gambling income?

Taxpayers are required to keep specific records of their gambling wins and losses to accurately report their gambling income on their tax returns. The IRS mandates that all gambling income must be reported, and having detailed records helps to substantiate the amounts earned and to differentiate between wins and losses. This documentation can include items like tickets, receipts, and a gambling log that lists the date, type of gambling, and the amounts won or lost.

Keeping these records is crucial not only for transparency but also to potentially offset gambling income with losses, as taxpayers may be able to deduct gambling losses up to the amount of their winnings when itemizing deductions. This requirement supports a clear audit trail should the IRS request evidence of reported gambling income and related losses.