@LMurray1 wrote:
Thanks for your response. So far I have created a number of different types of fake returns to experiment with adding gambling winnings/offsetting losses to see if I can create a single case where gambling winnings are 100% offset by equal losses. No such luck. I will be curious if anyone can create a return where they add gambling winnings/equal offsetting losses and end up with the same tax liability without any gambling entries. I have no kids. I am tempted to buy tax software from another company to see if the same thing happens, but that is an expensive and time consuming effort although well worth the money if I get different results from Turbotax.
It's not a matter of creating "multiple" fake returns. You just need to print out your full tax return with and without the gambling and compare them side by side.
To be specific:
Gambling income is reported on schedule 1 line 8b. The total of your other income from schedule 1 is added to form 1040 line 8. Your adjusted gross income is form 1040 line 11. When you add the gambling income, does line 11 change by more than the amount of the gambling income? If so, then the gambling income is making other income taxable (possibly capital gains, or social security benefits, or other items on schedule 1. Just look and see if anything changes that you don't understand.
Then, your deductions are reported on schedule A and copied to form 1040 on line 12a. When you enter your gambling losses, does your schedule A amount (line 12a) change by an equal amount, or less? If it changes by less, look at schedule A and see what is going on. (If your AGI is more than $300,000, there is a reduction of itemized deductions, but that was removed for 2018-2025 by tax reform. It's possible Turbotax is still calculating that. But you would see the result of that on your tax form by form 1040 line 12a not equal to the total of your schedule A deductions.
If your income goes up by the same amount as your deductions, then your taxable income (form 1040 line 15) will be the same with and without the gambling. In that case, you need to look at the back page of form 1040 and see which credit is coming out smaller. Then we can try and tell you why.
