How Do I Elect the Session Method for Gambling Wins/Losses?

[dhuber24]

I've gathered bits and pieces of this through various threads, still with no clear answers as to how to enter it IN TURBOTAX:

I need to know where in TurboTax I choose to select the Session Method for gambling wins/losses for casual gamblers, not Professional gamblers. My state (Wisconsin) requires the Session Method to be used; therefore, I am required to elect the Session Method for the Federal portion as well.

I have documented wins/losses and W2G's in the following format/example:

Date	Establishment	Wager Type	Beginning Cash	Ending Cash	Session Win/Loss	Session W2Gs issued
1/1/2024	XYZ Casino	Slot	$100	$100	$0	$2,000

As you see, I started my session with $100 cash, won $2,000 which triggered a taxable W2G, continued gambling in the same session and lost the $2,000 I won, and walked out of the casino with what I started, $100. My net session gain was $0.

My question:

I have dozens of gambling sessions (like the example above) throughout 2024. I need to enter my total gains for those gambling sessions in TurboTax. Federal publication 529 states, "You must report the full amount of your gambling winnings for the year on your Schedule 1 (Form 1040). You deduct your gambling losses for the year on your Schedule A (Form 1040)." It also states on Federal publication 525, for W2G’s received, “Include the amount from box 1 on Schedule 1 (Form 1040), line 8b.”

If my total net Session wins are the same as my total net Annual wins for 2024, there really isn’t an impact on the Federal portion. However, I must elect to use the Session Method on the Federal portion in order to use the Session Method on the State (Wisconsin) portion. Where in TurboTax do I elect the Session Method??

Going a step further to the State portion (once I make the declaration of the Session Method on the Federal portion); Where do I adjust my income IN TURBOTAX STATE portion to account for any offsetting losses against the W2G income (as shown in the example above)?

[dhuber24]

New information - now I just need to know how to enter this is TurboTax!
Directly from the Wisconsin Department of Revenue:

"Since you are allowed to deduct losses for your federal return but not for the state return, there would be a difference in the reported federal adjusted income. To account for this difference, you would need to create a "Wisconsin Only" form 1040 Schedule 1. Report only the winnings on line 8 of the 1040 Schedule 1. The totals of the 1040 Schedule 1 will then flow to line 8 of the 1040. This will create a new federal adjusted gross income, as losses will not be included.

The new adjusted gross income of the 1040 will flow directly to line 1 of the Form 1.

When filing your return, submit both versions of the federal income tax return, plus the schedule calculating the session method."

[AmeliesUncle]

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@dhuber24 wrote:

If my total net Session wins are the same as my total net Annual wins for 2024, there really isn’t an impact on the Federal portion.

 Where in TurboTax do I elect the Session Method??

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No necessarily.  It would only break even if you were already Itemizing your deductions.  If you were using the Standard Deduction, the gambling losses on Schedule A may only offset some (or none) of the tax from the gambling.

There is no "election".   You just report it that way.

Add up all of the session/days that have a gain (don't include sessions/days that have a loss).  Add up all of your W-2Gs.  Which one is larger?

The part of the Wisconsin Department of Revenue makes no sense.  You DON'T have any gambling losses on your Federal Schedule 1 (the losses are only on Schedule A).

[dhuber24]

That's why the Wisconsin DOR said "Wisconsin only" Schedule 1. They way I read that, is that I wouldn't enter it on Schedule 1 Federal form, only on the Wisconsin return.

[AmeliesUncle]

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@dhuber24 wrote:

"Since you are allowed to deduct losses for your federal return but not for the state return, there would be a difference in the reported federal adjusted income.

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That is not true.  As I said before, losses are NOT on the Federal Schedule 1 and would NOT affect Federal Adjusted Gross Income.   As I said before, that response doesn't make sense.

[dhuber24]

So even the entity enforcing the laws can't explain how to report gambling session wins?

I guess I just close my eyes, click something random in TurboTax, enter the adjustment and hope I don't get audited. At this point I'm yet to hear anyone provide guidance on how to do this in Turbotax.

[AmeliesUncle]

If you look at the example on page 10 of the Wisconsin Publication 600, that example shows the amount that is reported on the Wisconsin return ($1600).  That is the exact same amount that is reported on the Federal return on Schedule 1.  They are the same.

https://www.revenue.wi.gov/DOR%20Publications/pb600.pdf#page=10

As for how to report it in TurboTax, you haven't answered my prior question about the amounts of winnings versus the W-2Gs.  

Are you able to find the Federal section about gambling?

[dhuber24]

The example in publication 600 is exactly how I document my sessions. I don't use the sessions that have a loss, I only sum the sessions that have a gain, just like they show in the example.

I itemize deductions. I have to report the total W2Gs on the federal section, however, I need to make adjustments to the total amount reported. Going back to my example in the first post on this thread. I walk into the casino with $100. I win a $2,000 jackpot (W2G issued), I continue playing and lose all of it except the original $100 I started with. So for THAT SESSION I have $0 gain, but I have to report $2,000 from the W2G. I need that $2,000 adjusted to $0. If I just enter $2,000 in losses in TurboTax (in the screen I am prompted to answer in the Federal return), this loss doesn't "pass down" to the Wisconsin state return.

So even though my net gain is $0, Wisconsin still shows a $2,000 gain, UNLESS I elect to use the session method. Then I can adjust my income to reduce that $2,000 gain to $0.

I understand what is required for personal record keeping (which I have) as well as the rules for calculating session wins/losses and what can be used to offset W2G wins. I just need to know how to enter this $2,000 reduction in income, for that session so that the Wisconsin state return reflects a net gain of $0 (starting cash of $100 ending cash of $100).