Gambling
winnings are reported on page one of your return as miscellaneous income. Once
gambling winnings are entered, the next screen asks about Gambling losses.
Gambling losses are deductible but the program follows the statute and limits
them to gambling winnings. They are an itemized deduction, so if you don't
itemize you could be taxed on the winnings without an offsetting deduction.
Gambling
losses are deductible as an itemized deduction, but only if you itemize, and
only to the extent of any gains. They are one of the few deductions not subject
to the 2% limit that other miscellaneous itemized deductions are subject to.
Still, if your standard deduction is greater than your itemized deduction,
there is no benefit to claiming the gambling losses. Gambling income is
reported under the Federal Taxes / Wages and Income tab. It is the last
category listed. Once entered, you will be asked about gambling losses.
Some
states either don't allow a deduction for gambling losses or don't allow
itemized deductions. The result in those states is that for state tax purposes,
you are taxed on gambling gains without any offset for losses. Those states include:
- Connecticut*
- Illinois*
- Kansas
- Indiana*
- Louisiana
(Itemized Deduction Limitation)
- Massachusetts*
- Michigan*
- Minnesota
(State AMT — Impacts Amateurs)
- Mississippi
(allows a deduction only for losses in Mississippi)
- New
Hampshire (10% Gambling Tax)
- New York
(Itemized Deduction Limitation)
- Ohio
- West
Virginia*
- Wisconsin*
