So I’ve been keeping track, and it looks like I’ll be down about 60k by year-end, with 400k in wins and 460k in losses. Is there any way I can take that 60k off my federal income taxes? What’s the actual process like for doing this?
You have to claim the 400k in income, and then you can itemize and take the 400k in losses. But you’ll still be eating that 60k in losses.
Marlow said:
You have to claim the 400k in income, and then you can itemize and take the 400k in losses. But you’ll still be eating that 60k in losses.
So what’s the point of even doing it? Isn’t it just going to end up at zero?
@Jesse
The point is, you HAVE to claim the income either way.
@Jesse
Yeah, legally you’re supposed to report the 400k in winnings. By itemizing, you can at least offset with those losses instead of paying tax on the whole 400k.
@Jesse
You’re getting the benefit of not paying taxes on the 400k in income, but yeah, you’re out the extra 60k in losses. Also, if you’re going to gamble, I’d suggest stocks instead—at least they’re taxed better.
Just to be real, though, if you’re dealing with a gambling issue, maybe think about getting help. It can ruin lives. With everything going online now, gambling’s just way too easy to access, and it’s wrecking people’s lives. I’ve seen it happen in my family, so please be careful.
@Jesse
It doesn’t quite come out to zero because gambling losses are itemized, which means you lose out on the standard deduction.
You’d have to itemize your deductions to claim the losses unless you’re a professional gambler. When you itemize, you give up the standard deduction, and only gambling losses up to the winnings amount can be deducted.
@Skyler
So is there really any advantage to claiming the losses?
Jesse said:
@Skyler
So is there really any advantage to claiming the losses?
Yeah, if you don’t claim your losses (up to your winnings), you’re going to be taxed on that full $400k, instead of zeroing it out with the losses.
Jesse said:
@Skyler
So is there really any advantage to claiming the losses?
Definitely, since you have to report the 400k as income. Claim the losses so you don’t pay more in taxes.
Jesse said:
@Skyler
So is there really any advantage to claiming the losses?
Yes, definitely deduct the losses up to the winnings amount. The rest of the losses, you’re stuck with. That’s just how it works under the tax law.
Nope, you can only use gambling losses to offset gambling winnings. You still have to report that 400k in winnings no matter what, and you’ll need to itemize on Schedule A to offset with the 400k in losses. But that extra 60k won’t be deductible.
You need to report all the winnings as income, or the IRS will be on your case with a notice and a bill. You can claim losses up to the amount of winnings if you itemize on Schedule A.