This year’s Kentucky Derby was one to remember. It produced an incredible upset with Rich Strike’s victory at 80-1 odds.
Naturally, this unlikely champion created plenty of disorder for bettors.
While some won, more people likely lost money that Saturday. Some might not be aware, but horse bettors can deduct these losses from their taxes with the IRS if done properly.
On one side of the Derby, the race paid out incredibly well for anyone brave enough to put Rich Strike on their tickets. With the colt’s bolstered odds as a long shot, successful exacta and superfecta bets were through the roof.
A $1 superfecta generated a $321,500.10 win. This bet included two of the favorites:
- in Epicenter (4-1)
- and Zandon (6-1)
- but also needed the 35-1 horse in Simplification
Two unlikely finishers in the top four means a lot of losers, though. Since the IRS doesn’t allow you to combine your net wins and losses, it’s important to know exactly how to count your gambling downfalls.
Whether it’s the Kentucky Derby or the Blue Grass Stakes, horse racing is ingrained in Kentucky culture. There’s a rich history of gambling on horses in KY too. However, full-on sports betting in Kentucky is still a struggling battle with a majority of Republicans in the Senate in opposition.
How to deduct Kentucky Derby betting losses with the IRS
Most bettors are aware of the rules surrounding how to properly report winning bets. The IRS takes 37% of these funds, exactly like other income.
Although it might be a waste of time for some who only bet a few dollars here and there, there’s a way to deduct your losses to help offset things. One may think that the government would view all gambling totals together, but wins and losses are separate entities for taxes.
The IRS provides lots of information through its website in regards to the forms needed for each. There’s Form 1040, as well as Form W-2G for certain gambling triumphs.
However, to deduct losses from events such as the Kentucky Derby, you’ll need to present a lot more. They ask that you itemize your deductions through the Schedule A portion of Form 1040, but that’s not it.
The IRS requires specific record keeping to count the money lost from betting.
This begins with a journal or diary that states all of your gambling wins and losses. Along with keeping track of everything, you must give proof, as well.
That consists of betting tickets, receipts, statements, and other records to keep everything as transparent as possible. If you don’t have all of the necessary pieces in place, you might not have the ability to claim these losses.
While it’s a good idea to keep track of all betting endeavors overall, the IRS requires a lot.
You might need to know the exact date you placed which type of bet and the specifics involved. The name and address of the establishment taking the bet is also necessary.
It might not even be a bad idea to make a note of the other people with you each time at the gambling site, as well.
Even though this might seem like a bit of a chore, it should come as exciting news for those who gamble on horses in KY and the Kentucky Derby.