Amy started visiting casinos two years ago, and had won a few jackpots—enough for her to enjoy her casino play once or twice a month. She faithfully used her players club cards in every casino she visited. But two days before the end of 2011, she became a very lucky winner of a $18,000-plus jackpot at one of her favorite Southern California casinos. She was thrilled, of course. Until she realized she had to pay taxes on her wonderful win. Her elation turned to worry. So what could she do?

It’s the beginning of the New Year and you may be thinking about your 2011 tax preparation. This year you have until April 17th to file. April 15th is the traditional tax return filing date, but as the 15th is a Sunday this year, and April 16th is Emancipation Day, a public holiday in the District of Columbia, the IRS has approved April 17, 2012, as the tax-filing deadline for 2011 tax returns and extension requests.

I hope 2011 was a winning year for you, like Amy. I am not a CPA or professional tax preparer, but I offer these tax prep tips based on my experience and research. The information I present here can be beneficial to your tax bottom line. I play in casinos in Southern California, and have learned how to help my tax preparer. And, I believe, I’ve kept as much of my winnings as possible.

There are two key elements in preparing for your taxes if you are a casino player: keeping a logbook of your play throughout the year, and getting win/loss statements from casinos before you file.

Keeping a Logbook

As I play and win (hopefully) each year, I keep W-2Gs I receive from all casinos in one place, and I keep a log of all my wins and losses. I’ve been doing this now for years, and it’s probably the best practice to help me keep more of winnings. For the past few years, I’ve won a little more than I lost. Because I had gambling losses to deduct from my winnings, I did not have to pay as much in income taxes. My tax preparer always reminds me that I may deduct gambling losses only if I itemize deductions. And the amount of losses I deduct may not be more than the amount of gambling income reported on my return.

Players are required to list all gambling and jackpot winnings when filing income taxes. Gambling winnings are taxable income. The IRS allows deductions of gambling losses up to the amount of your winnings. And, you can do this only if you have documentation of your losses. Keeping a logbook, therefore, is the best and only way to do this.

The W-2G Form

As most gamblers know, the IRS requires casinos to report on a W-2G form all players’ jackpots of $1,200 or more on slot machines or other casino games. The W-2G form lists your name, address and Social Security Number (SSN), plus other pertinent information regarding your win. Casinos are required to send a copy of all W-2Gs to the IRS, and to give players a copy the W-2G with their winnings clearly stated. The W-2G must be signed by the winner as proof that the correct SSN was submitted to the casino and that they received their winnings.

Setting Up a Logbook

To keep an accurate logbook, be certain you include the following: the casino name and address of where you played; the date and time of when you played; the type of game you wagered on (slots, blackjack, poker, etc.); the amount(s) you won and/or lost for each session or game; and proof of your winnings or losses (W-2Gs, ATM receipts, cancelled checks, bank withdrawal slips, credit card receipts, etc.).

If you are ever audited by the IRS (perish the thought), and you have a logbook of your winnings and losses, you will have at least the basic records to show where, when and how much you gambled and won or lost. You also must keep all atm receipts, cancelled checks or bank statements showing casino transactions to back up your logbook. Your logbook has to be as accurate as possible to be credible.

I keep my logbook on my computer, in Microsoft Excel, but you can also keep it in a notebook by hand. I set it up with eight column headers: Date Played, Time, Casino, Casino Address, Game Played, Winnings, Losses, Proof. I update my logbook after every casino visit.

Logbook Revelations

I also have two other columns in my logbook: one for the amount of my gambling stake each time I go to the casino; and the other for the amount I leave the casino with. These two columns are not for the IRS or potential tax relief, but for me to be aware of my gambling and how I played. When I started doing this several years ago, I was shocked to notice that on certain casino visits I won jackpots and played them back! So while keeping a logbook is a necessity for tax relief, it is an incredible tool for being aware of what and how you gamble, and your gambling patterns.

Win/Loss Statements

Coupled with your yearly logbook, casino win/loss statements are essential tools for tax preparation. Win/loss statements are estimates of what a casino customer has lost or won during a calendar year based on player tracking information. They are designed to assist players with their annual tax filings, and must be requested from the casino.

Some players use win/loss statements to take the place of a logbook — which casino players are supposed to keep according to the IRS, and hardly anyone does. If they have been audited, then they know better.

Casinos do not guarantee the accuracy of win/loss statements, as they are based on players club card tracking. After all, the casino does not know if you play, on occasion, without your card. But the information is very helpful to casino players who need evidence of losses to offset documented winnings that were reported to the IRS during the year.

Win/loss statements are confidential, as all casinos know the importance of protecting their players’ privacy. You usually have to request the statement via a signed form plus id in person.

So, what could Amy do to keep more of her end-of-year winnings? She didn’t know about keeping a logbook, but says she has already begun one for 2012. Thankfully, since she always used her players club cards, she will be able to get her win/loss statements. She will still have to pay the IRS more than she wants—but, don’t we all?

Use these invaluable tools—your casino logbook and win/loss statement—and make sure you keep as much as you can of your jackpot winnings!

Gail Anders writes for travel magazines and lives in Laguna Beach and New York.