Gambling losses are an itemized deduction for federal and state returns up to the gambling winnings. Colorado starts with federal taxable income which is after itemized deductions; so it already accounts for the gambling losses entered on line 16, Schedule A on an itemized return.
Is there still a way to record gambling losses for state taxes since Colorado is limiting itemized deductions?
Yes, there is -- if you've entered gambling losses on your federal return, those will be reflected on your Colorado return.
Line 1 of your Colorado return starts out using the taxable income from your federal Form 1040-series form. That means that any allowable gambling losses you included on your federal return are already accounted for on your state return.
To enter your gambling losses in TurboTax Online:
Note that you can't claim gambling losses unless you itemize deductions, and the TurboTax program won't allow you to enter losses larger than your total winnings.
Thank you, i have done that, but since colorado limits itemized deductions for certain taxpayers, my gambling losses are added back with the unallowed itemized deductions and i am taxed on all the w-2 income. I have read where you can record gambling sessions to net all these out on a daily basis as a way to record this differently so the losses don't get disallowed. Have you heard of the gambling session method and do you know how i record it that way?
You should record gambling wins and losses each time you gamble. The gross must be reported. The losses are added together for the itemized deductions which are giving you trouble. You are not allowed to use net losses. The losses may not exceed winnings. The IRS would lose money if net winnings were allowed. Those who can't itemize, lose the deduction.
See Topic no. 419, Gambling income and losses
Did you ever get a response on this? I am dealing with the same thing.
i did not get an answer. I ended up using the gambling sessions method. Put together a spreadsheet of daily activity and results and filed it that way as a net. My return was accepted. one of the sites i used to put together the filing is below. It is grey area, but so far so good. I also moved out of the state due to this.
Can you repost that link? I am in the same situation. I netted around $25-30k, but my "winnings" were much higher, and I am being forced to pay the taxes on the full amount. I cant possible imagine going day by day at this point through all the sportsbooks I use to wager on NASCAR, not to mention I guessed on some books that stopped operating in Colorado in 2024. So Colorado is essentially forcing me to pay thousands more than I actually owe. I called the department of revenue, and they were clueless. THANK YOU!
This provides the information from the link above for the Sessions method of reporting gambling.