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jenben
New Member

Professional gambler. Filing Sch C. Do I enter W2G's AND deduct losses when asked? Then also enter the offsetting entry as "other income' on Form 1040, Line 21?

 
9 Replies
Hal_Al
Level 15

Professional gambler. Filing Sch C. Do I enter W2G's AND deduct losses when asked? Then also enter the offsetting entry as "other income' on Form 1040, Line 21?

No. If you are filing Schedule C, you do not enter the W-2Gs at the W-2G screen. Enter at Business Income. You will not get the offsetting entry box. The W-2G screen is not for professional gamblers. Losses will be entered as business expenses. There is no category on Schedule C; so enter losses as other expenses.

 

Wagering losses still cannot exceed gambling winnings. Any excess gambling losses over gambling winnings cannot be carried forward or carried back to offset gambling winnings from other tax years.

 

Reference:

https://www.taxsamaritan.com/tax-preparation-services/gambler-tax-preparation/

hseing
Level 2

Professional gambler. Filing Sch C. Do I enter W2G's AND deduct losses when asked? Then also enter the offsetting entry as "other income' on Form 1040, Line 21?

What will it happen when the IRS discover that the W2G was not reported since it’s reported under Business Income? How does the IRS know that the amount in the Business Income belong to  i.e. is the W2G amount? Anything is linked between the expenses amount and W2G so that the IRS won’t question about not reporting the W2G amount? Thanks for your help.

DoninGA
Level 15

Professional gambler. Filing Sch C. Do I enter W2G's AND deduct losses when asked? Then also enter the offsetting entry as "other income' on Form 1040, Line 21?

oldmandef
Level 2

Professional gambler. Filing Sch C. Do I enter W2G's AND deduct losses when asked? Then also enter the offsetting entry as "other income' on Form 1040, Line 21?

What if we are filing Sch C professional gambler but also received a W2G in which taxes were withheld?  Do we put those withholdings under "other federal/state withholdings" since we are only filing sch C winnings (income) and losses (expenses)?  Or is there a better method? 

AliciaP1
Expert Alumni

Professional gambler. Filing Sch C. Do I enter W2G's AND deduct losses when asked? Then also enter the offsetting entry as "other income' on Form 1040, Line 21?

Yes, that would be the best way to handle those withholdings and report all income appropriately.

 

@oldmandef

oldmandef
Level 2

Professional gambler. Filing Sch C. Do I enter W2G's AND deduct losses when asked? Then also enter the offsetting entry as "other income' on Form 1040, Line 21?

Thanks @AliciaP1 .  My state form is giving me an error doing it this way, but if I put the W2Gs in the W2 area then put the total losses as expenses on schedule C it works.  However doing it this way I won't have any income on schedule C though, do you think that's OK in this case to show the income on the W2G area and losses on schedule C as expenses?  

ErnieS0
Expert Alumni

Professional gambler. Filing Sch C. Do I enter W2G's AND deduct losses when asked? Then also enter the offsetting entry as "other income' on Form 1040, Line 21?

Entering gambling income as W-2Gs and claiming expenses on Schedule C with $0 income will not work.

 

Entering the W-2Gs says to the IRS that this income is not from self-employment and that you are claiming self-employment expenses with no income. As Tax Champ @DoninGA says, the W-2Gs should be entered as business income.

 

Check were you entered your state withholding.

  1. Type estimated tax payments in Search
  2. Select Jump to estimated tax payments
  3. Scroll down to Other Income Taxes Paid in 2021
  4. Start/Revisit Withholding not already entered on a W-2 or 1099

You will not be able to e-file.

oldmandef
Level 2

Professional gambler. Filing Sch C. Do I enter W2G's AND deduct losses when asked? Then also enter the offsetting entry as "other income' on Form 1040, Line 21?

Thanks @ErnieS0 that was the error I was getting on the state return.  It is letting me e-file the federal return though does that make sense?  I can e-file federal with "other withholdings" but not state with "other state withholdings"? 

ErnieS0
Expert Alumni

Professional gambler. Filing Sch C. Do I enter W2G's AND deduct losses when asked? Then also enter the offsetting entry as "other income' on Form 1040, Line 21?

Every state has different rule, but that does make sense @oldmandef. Some states want copies of documents with state withholding, which is probably why you are not able to e-file state.

 

TurboTax allows you to e-file federal and mail your state return. I recommend that route.

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