Gambling Tax Itemized Deductions
This final category of itemized deductions includes items such as gambling losses to the extent of gambling winnings, losses from partnerships or subchapter S-corporations, estate taxes on income. You must itemize your deductions to claim your gambling losses as a tax deduction. This means you can’t take the standard deduction for your filing status, which often amounts to more than a taxpayer’s itemized deductions. You’re allowed to deduct losses only up to the amount of the gambling income you claimed. So if you won $2000 but.
- Gambling Tax Itemized Deductions Limits
- Gambling Tax Itemized Deductions Forms
- Gambling Losses Tax Itemized Deductions
- Gambling Tax Itemized Deductions Deduction
If you’ve been following us for a bit, you may have noticed that we’ve highlighted the most well-known deductions that can be itemized for your tax return: medical expenses, the SALT deduction, home mortgage deduction, charitable deduction, and casualty losses. There’s one more section left on that Schedule A form, “Other itemized deductions.”
Other Itemized Deductions
What constitutes other itemized deductions? Before the Tax Cuts & Jobs Act (TCJA) of 2017, a long list of deductible expenses, mostly associated with business-related expenses, were allowable. The TCJA overhaul reshaped deductible expenses as we know it. Therefore, the list of allowable “other itemized deductions” shrank down to a significantly smaller list:
- Gambling losses up to the extent of gambling winnings
- Casualty & theft losses from income producing property
- Federal estate tax on income in respect to a decedent
- Deduction for amortizable bond premium
- Ordinary loss attributable to a contingent payment debt instrument
- Deduction for repayment of amounts under a claim of right if over $3,000 (see pub 525)
- Certain unrecovered investment in a pension
- Impairment-related work expenses of a disabled person
If you’re curious, check out Publication 529 starting on page 3 for an exhaustive list of what is no longer deductible.
Schedule A Deduction Plan
Combining these other itemized deductions with the other Schedule A deductions will help you to claim itemized deductions as opposed to only claiming a standard deduction. Itemized deductions lower your taxable income and can potentially save you in taxes if you itemize properly. With some planning, taxpayers can rightfully claim itemized deductions. Here at MiklosCPA, we feel that sharing knowledge, such as available itemized deductions, empowers our clients to make effective decisions for their emerging businesses. Get a vision of how we can help your emerging business by giving us a call! Also, follow our socialmediapages for more “good-to-know” articles like this one and share that knowledge with your friends and associates!
Gamblers understand the concept of win some, lose some. But the IRS? It prefers exact numbers. Specifically, your tax return should reflect your total year’s gambling winnings – from the big blackjack score to the smaller fantasy football payout. That’s because you’re required to report each stroke of luck as taxable income — big or small, buddy or casino.
If you itemize your deductions, you can offset your winnings by writing off your gambling losses.
It may sound complicated, but TaxAct will walk you through the entire process, start to finish. That way, you leave nothing on the table.
How much can I deduct in gambling losses?
Gambling Tax Itemized Deductions Limits
You can report as much as you lost in 2019 , but you cannot deduct more than you won. And you can only do this if you’re itemizing your deductions. If you’re taking the standard deduction, you aren’t eligible to deduct your gambling losses on your tax return, but you are still required to report all of your winnings.
Where do I file this on my tax forms?
Let’s say you took two trips to Vegas this year. In Trip A, you won $6,000 in poker. In the Trip B, you lost $8,000. You must list each individually, with the winnings noted on your return as taxable income and the loss as an itemized deduction in Schedule A. In this instance, you won’t owe tax on your winnings because your total loss is greater than your total win by $2,000. However, you do not get to deduct that net $2,000 loss, only the first $6,000.
Now, let’s flip those numbers. Say in Trip A, you won $8,000 in poker. In Trip B, you lost $6,000. You’ll report the $8,000 win on your return, the $6,000 loss deduction on Schedule A, and still owe taxes on the remaining $2,000 of your winnings.
What’s a W-2G? And should I have one?
A W-2G is an official withholding document; it’s typically issued by a casino or other professional gaming organization. You may receive a W-2G onsite when your payout is issued. Or, you may receive one in the mail after the fact. Gaming centers must issue W-2Gs by January 31. When they send yours, they also shoot a copy to the IRS, so don’t roll the dice: report those winnings as taxable income.
Don’t expect to get a W-2G for the $6 you won playing the Judge Judy slot machine. Withholding documents are triggered by amount of win and type of game played.
Expect to receive a W-2G tax form if you won:
Gambling Tax Itemized Deductions Forms
- $1,200 or more on slots or bingo
- $1,500 or more on keno
- $5,000 or more in poker
- $600 or more on other games, but only if the payout is at least 300 times your wager
Tip: Withholding only applies to your net winnings, which is your payout minus your initial wager.
What kinds of records should I keep?
Gambling Losses Tax Itemized Deductions
Keep a journal with lists, including: each place you’ve gambled; the day and time; who was with you; and how much you bet, won, and lost. You should also keep receipts, payout slips, wagering tickets, bank withdrawal records, and statements of actual winnings. You may also write off travel expenses associated with loss, so hang on to airfare receipts.
Use TaxAct to file your gambling wins and losses. We’ll help you find every advantage you’re owed – guaranteed.