The IRS publishes guidelines for the information required to document
your gambling wins and losses. IRS Publication 529
says that you are required to keep an accurate diary of your wins and
losses:
You cannot reduce your gambling winnings your gambling losses and report
the difference. You must report the full amount of your winnings as
income and claim your losses (up to the amount of winnings) as an
itemized deduction. Therefore, your records should show your winnings
separately from your losses.
Diary of winnings and losses. You must keep an accurate diary or
similar record of your losses and winnings. Your diary should contain at
least the following information.
1) The date and type of your specific wager or wagering activity.
2) The name and address or location of the gambling establishment.
3) The names of other persons present with you at the gambling
establishment.
4) The amount(s) you won or lost.
You can see that it's hard to apply some of these instructions to online
poker. The IRS goes on to say that your diary is not enough and that you
must have other proof of your wins and losses:
Proof of winnings and losses. In addition to your diary, you
should also have other documentation. You can generally prove your
winnings and losses through Form W-2G, Certain Gambling Winnings,
Form 5754, Statement by Person(s) Receiving Gambling Winnings,
wagering tickets, canceled checks, credit records, bank withdrawals, and
statements of actual winnings or payment slips provided to you by the
gambling establishment.
What documentation could be used to prove online poker wins and losses?
Hand history and tournament result emails are a more detailed record of
your play than is described above and the IRS might accept these as
supporting documentation. However, the IRS has not yet ruled on this
matter. Financial records from your bank, credit card or web-based cash
account (e.g., NETeller) that show all transactions to and from the poker
site might also be helpful. Unfortunately, the writers at the IRS didn't
anticipate online poker and so, in the end, nobody knows what
documentation is sufficient.
(Remember, the information here is not tax advice. For advice you will
need to see a tax professional.)