Categories
BLOG

should you keep losing lottery tickets

Mr Lotto: How to handle losing lottery tickets with the taxman

The new year brings our yearly obligation to the taxman, and that has one reader wondering if all those losing tickets might finally pay off.

“Does accumulating nonwinning tickets help at the end of the year when one files tax?” wrote Kimberly. “Last year I lost approximately $10,000, and I did not save any losing tickets. Can I file it in my tax claiming that I have lost $10,000?”

And the answer is: yes and no. You can legally offset any money you won gambling during the same tax year with losing lottery tickets. But you cannot deduct losing lottery tickets from regular income.

So, Kimberly, if you won $10,000 in 2007 from the lottery, horse tracks, casinos, etc., then you could avoid paying any tax on those winnings if you could show them $10,000 in losing tickets.

Will they actually check the tickets?

They may very well want to see them, and some form of documentation concerning your playing habits, such as a day planner or journal showing wins, loses and where you play.

So, if you’re a regular lottery player it’s a good idea to keep all losing tickets at least until the end of the year. Who knows? The big win could come on New Year’s Eve.

Breaking News Newsletter

This next letter sounds too crazy to be true. But writer Joseph Keohan of Ozone Park, Queens, says it really happened.

Most Read

“On Jan. 1, I purchased two $5 Quick Pick Mega Millions tickets. The first four sets of numbers were identical on both tickets, exact same numbers in exact same sequence, except for the Mega Ball numbers, which were all different.

“Is it possible for a ‘completely random’ system to generate a group of 20 numbers (four sets of five each) in exactly the same sequence? I’m guessing the odds of thishappening are in the billions to one! I wouldbe very interested in your thoughts on this phenomenon.”

The first question is whether you got both tickets from the same store. It should be impossible to get them back to back in the same store.

But if they came from two different stores, then this is possible. The random number programs in each terminal are identical and are keyed to the time the terminal is switched on.

The new year brings our yearly obligation to the taxman, and that has one reader wondering if all those losing tickets might finally pay off.

should you keep losing lottery tickets

By Admin Post date

3 Reasons To Keep Your Scratchers: Second Chance Draws & More

Today I want to cover the THREE reasons you should not throw a ticket away. Even when it’s a loser. 2nd chance draws are not the only reason.

[1] You might be wrong!

A ton of winning scratch-off tickets are just thrown away. These are normally just small winners (but not always).

They are not thrown away because people can’t be bothered to claim small amounts. They are thrown away because people haven’t realised that they did actually win!

Or sometimes because they lost the ticket. Or washed it in their jeans pocket. Or the dog ate it. You get the picture 🙂

The number of unclaimed prizes every year for each lottery company is insane.

So firstly, take care of your tickets. Treat them as winners until you are positive they are not.

But second DOUBLE CHECK every ticket.

Play the game first. Visually check it and decide how much you won. Then keep that ticket until you can scan it at a self-check machine to see what that says.

If there’s no self-scan machine, then by all means ask the shop assistant to scan it for you. But do this having some idea of what the ticket is worth. And sign the back first.

The newspapers are full of stories of people who thought they only won small, but then it turned out to be a heck of a lot more.

Can you really win scratch offs every time? Get the answer to this and lots more important tips in my free scratch off tips.

[2] Second chance draws

These are bonus draws that give you a chance to turn a genuine losing ticket into a winner.

How does 2nd chance scratchers work?

It’s a random draw process. And you get one entry for every losing ticket you submit. They then randomly pick out e.g. 10 tickets, who might all win $1,000.

How to play 2nd chance scratchers?

These days they are mostly done online (you used to have to mail them in). So typically you have to register on the official lottery company website first. Then you just type in the barcode number for each of your losing tickets. Simple, right?

TIP: If the ticket is rejected when you try to enter it in a second chance draw, then check it closely again – because it might actually be a winner! And winning tickets cannot be entered 🙂

Not every lottery company offers these extra draws (check their website). But even if they don’t have one right now, they may soon. So you could have a stockpile of entries all ready to go if you keep your losing tickets.

They usually limit how old a ticket can be, so there’s not much point keeping 10 year old tickets. But some older ones will most likely still work.

These draws are definitely worth doing.

Why? Because people are lazy. Most players cannot be bothered to enter 2nd chance draws.

Which means your chances are a lot better than you might think. If you CAN be bothered.

Do you have to keep your second chance lottery tickets?

Yes, please do keep them. Although unlikely technically anyone could enter the code from your ticket. So you do need to keep that ticket to be able to prove you are the rightful owner and winner of the 2nd chance prize.

TIP: Do you know what are the best scratchers to buy? Yes, it really does matter. Because this affects your chances of winning more than anything else.

[3] Tax offsetting

I’m not a tax expert of any kind. But in the USA lottery winnings are taxable.

What most people don’t realise though is that your entry costs can be offset against those winnings. Which can reduce your tax bill!

It’s like winning all over again 😉

But you must keep your tickets as evidence of those costs.

Talk to your tax office – they are nice folks really. They will be happy to explain if you’re not sure how this works. Or how to do the paper work.

Today I want to cover the THREE reasons you should not throw a ticket away. Even when it’s a loser. 2nd chance draws are not the only reason.

How long to save losing lottery tickets?

I know I can write off losing lottery tickets (a) up to the amount of any winnings, and (b) provided I itemize my federal taxes.

But does that apply only to losses in the same year as winnings, or can the losing tickets be carried forward so that losses accumulated over the years can be claimed?

2 Answers 2

In general, you can only deduct expenses in the year the expenses were paid. The only exceptions to this that are talked about in Publication 17 are investment interest carryover and charitable contributions carryover.

Gambling losses cannot carry forward to future years, for most tax situations.

“If you itemize your deductions on Schedule A (Form 1040), you can deduct gambling losses you had during the year, but only up to the amount of your winnings. If you’re in the trade or business of gambling, use Schedule C (Form 1040).”

How long to save losing lottery tickets? I know I can write off losing lottery tickets (a) up to the amount of any winnings, and (b) provided I itemize my federal taxes. But does that apply

3 Reasons To Keep Your Scratchers: Second Chance Draws & More Today I want to cover the THREE reasons you should not throw a ticket away. Even when it's a ]]>