Are Gambling Federal withholding taxes fully refunded when winnings equal losses?

[Texas Roger · Accepted solution]

No they are not. Gambling winnings are entered as taxable income. Losses up to the amount of winnings can be entered as itemized deductions. The only way they will offset winnings is if you have enough itemized deductions without the losses to be more than the standard deduction. Then the losses are an additional deduction that can offset the winnings. 

You get a credit for the taxes withheld on your winnings when you enter them on your tax return. Whether you will get a refund of any of the taxes or have to pay more depends on how much other income you have and how many deductions you can claim. 

[ttaxuserid508]

Without gambling losses I get the Standard Deduction of $24k. With the gambling losses I get Itemized Deductions of $32k. Does this explain why I'm not getting the full federal withholding back?

[Texas Roger]

It's not possible to answer that question without knowing details of your tax return. If your winnings and losses were more than $8000 each, you might not get all of your withholding back. It also depends on how much was withheld and what tax bracket you are in.

[ttaxuserid508]

Interesting; winning and losses were about $19,000 each. Per Turbo Tax with latest updates my tax bracket is 22% and effective tax bracket is 10.44. Does the level of gambling winnings have something to do with withholding?

[Texas Roger]

If withholding was required, it is generally 25%.

[Trystin246]

I have entered my gambling winnings on my W2G form, but I do not see a place to enter the amount of taxes with held except on this form (which I have done).  Isn't there a pace on my tax form to record the taxes withheld in order to get credit for them?