No, gambling losses are deductible only to the extent of gambling winnings.
For more information, including documentation requirements, please see Can You Claim Gambling Losses on Your Taxes?
I found the answer - you must indicate that the income on the 1099-misc was a prize then you can claim gambling losses.
No, gambling losses are deductible only to the extent of gambling winnings.
For more information, including documentation requirements, please see Can You Claim Gambling Losses on Your Taxes?
I had both W-2G gambling ($1714)and 1099Misc PRIZE for winning a poker tournament ($1425). Deducted $3139 for gambling loss. Return was rejected for that item. Please advise.
Was your 2021 Federal 1040 tax return transmitted and rejected by the IRS? Or was you return subject to errors under Review? Or something else? Please clarify.
Gambling winnings and losses can be reported at Federal / Wages & Income / Your Income / Less Common Income / Gambling Winnings.
Gambling winnings are reported on line 8b of 2021 1040 Schedule 1 Additional Income and Adjustments to Income.
Gambling losses are reported on line 16 of 2021 1040 Schedule A Itemized Deductions. Schedule A Itemized Deductions is not used if you claim a standard deduction on your 2021 1040 tax return.
See this TurboTax Help.
I have the same situation. My federal and state were rejected. I had both W-2G and 1099-Misc from a slot tournament. Are slot tournament winnings reported on a 1099-Misc have the ability to have gambling losses taken against it?
You can deduct gambling losses against slot tournament winnings, but only as itemized deductions, and only up to the amount of your winnings.
Also you need to be able to benefit from itemizing your deductions for the losses to benefit you. The standard deduction amounts for 2021 are $12,550 single filer, and $25,100 married-joint. If your itemized deductions are not more than than, you will get no benefit from deducting your gambling losses on your tax return.
The Schedule 1, line 8 for 2021 has been expanded into several lines, namely lines 8.a. through 8.z. In prior years if you had received a 1099-Misc, Turbotax would ask what the nature of the 1099-Misc was. One of the choices was "Gambling" and it was recorded on a single line 8 along with your W-2G winnings (so you could offset all gambling losses against line 8).
To deal with the situation in tax year 2021 where the line 8. on Schedule 1 has been expanded, is to simply "override" the entry where an amount from a 1099-Misc has been entered on one of the line 8 subsections, blank that entry out and add it to line 8.b. where "Gambling" winnings are shown. (The problem here is that Turbotax did not give the option of describing the 1099-Misc as having been derived from Gambling activities.) I did this, all worked well, and my return was accepted by the IRS. If the IRS should ever question this, you can simply explain to them what you did and why. You reported all income, so there should not be a problem.
The thing to remember is that, regardless of the form used, "gains from wagering activities" is the essence of what the IRC (Internal Revenue Code) speaks to, and gains can be reported on Forms W-2G as well as a 1099-Misc.
It is very important, to stress what I have previously mentioned, that the IRC speaks of "Gains from wagering activities," and "Losses from wagering activities." It does not say winnings from gambling or losses from gambling. Furthermore, it does not define anywhere in the IRC what it means by "Gains from or Losses from wagering activities." Both the terms "Gains" and "Wagering" activities are much broader in their meanings.
It therefore follows that something like gains from casino drawings, where the tickets are earned from slot machine play, could easily fit into the definition of gains from wagering, thus losses could be applied to both the amounts reported on W-2G and Form 1099-Misc.
In a previous reply to this question, I referred to the Tax Court case, Libutti vs. The Commissioner dated March 7, 1996. In that case, a heavy gambler (Libutti) spent millions of dollars gambling at a New Jersey casino. The casino, in turn, and as an enticement to frequent the casino, gave Libutti expensive gifts, including exotic cars, diamond jewelry, expensive travel vouchers, etc. exceeding $2.5 million in value. The casino issued 1099-Misc forms to Libutti for the value of these "comps" or gifts and Libutti, in turn, applied his gambling losses against all of the 1099-Misc income. The IRS took the position that Libutti could not offset his losses against such gifts (comps). However, the Tax Court sided with Libutti, in essence saying that the strong relationship between his gambling activities at the casino, and the casino's providing comps or gifts to Libutti all fell into the meaning of "gains from wagering activities" and, therefore, he could offset his losses against both the wagering winnings (gains) as well as the comps (gains). They pointed out the obvious in saying that such gifts or comps never would have been given to Libutti except for his gambling activity. In other words, the character of his gains was the same regardless of how they were received or on what forms they were reported. There is a similar relationship between gains from slot machine play, and gains from drawings where the tickets for the drawings are earned because of, and only because of, machine play. Though the gains from the slots are reported on Form W-2G, and the gains from the drawings are reported on Form 1099-Misc, the wagering losses for machine play can be offset against both.
I reported W2G amounts as usual, and deducted the W2G total amount as gambling loss.
I reported 1099MISC amounts as POKER TOURNAMENT WINNINGS and then went to the Business Income and Expense section and used the 1099Misc amount as a deduction: Gambling Losses up to the total amount of POKER TOURNAMENT WINNINGS.
I originally did that but the return was rejected. My W-G amounts went onto line 8b on Schedule 1, and my 1099-misc was posted to line 8h. I then recorded total losses against both amounts on Schedule A, line 16. So, as I mentioned in my other posting, I simply did an "override" on Schedule 1 and recorded the total of W-2Gs and 1099-misc as one lump sum, to get around the IRS rejection and it worked, so far.
My return was rejected as well.
I have a large amount won as a prize, but I had to play slots in order to obtain "entries" or tickets for the prize drawing. I attempted to list my slot losses in the proper area to offset the Prize. My return was rejected because I did not have a W-2G to claim the deduction amount. I did not get any W2-Gs during the year, I only have the 1099-misc for the prize drawing. This appears to be a flaw in the Turbo Tax software. From what I have read here, I should be able to claim or deduct my losses in Slots to reduce the taxable amount of my prize. Comments? [email address removed]
Get your win/loss statement. You can only deduct losses if itemizing.
You must report your W2-Gs or 1099-MISCs without modification of amount.
If your win loss shows winnings other than the above, net those against the losses.
And if there are any losses left, deduct them if it you are itemizing
Otherwise, if you have more other winnings than losses - forget it (or report it)
I did the proper entry of my 1099 Misc. prize win but I have no W2G's to report.
My win loss statement shows a loss higher than my prize win reported on the 1099.
I had to gamble on slots to obtain entires for the prize drawing.
When I enter all this and efile it gets rejected.
It tells me I I can only deduct what I lost if I have something entered on the W2G screen area....
Again, I have no W2Gs to report.
I have experienced casino drawings, but never won. Try seeing if the casino can retract the 1099-MISC and issue a W2-G. Although I suspect a 'raffle' (drawing) is not the same as playing slots (i.e. gambling)
The fact that you have a 1099 instead of a W-2G, means the payer believes there was no wager. Unless you have it changed to a W-2G (as mentioned above) , there is no way to enter the wager.
At the very least, they should adjust the amount in box 3 to account for the buy-in, which were paid slots.
I agree that it is a flaw in the Turbotax software - they should ask at the time of entry of the 1099-Misc information if this relates to gambling or wagering activity, like they have in prior years. I got around this by going to the form, overriding the entry on Schedule 1, Line 8, blanking out the amount and re-entering it on line 8.b. (gambling). That way the losses can be offset and it passes muster with the IRS.
That's all good info but where should one enter the 1099 misc amount won in the tournament? Can I add it to Schedule 1 line 8b gambling income and therefore have it offset in the schedule A gambling losses?
Thanks. Do you mean you entered the amount on Schedule 1 line 8h 'prizes and awards'? Then did your losses in schedule A reduce your income by that 1099 amount you put on line 8h?
A prize is a prize and gambling winning are gambling winnings. They are not interchangeable. You can't offset awards and prizes with gambling losses. They are not the same thing.
Enter your prize as other income as described above. If they were gambling winnings, report them as gambling winnings and take your losses.
You must report all gambling winnings as "Other Income" on Form 1040 or Form 1040-SR (use Schedule 1 (Form 1040) PDF), including winnings that aren't reported on a Form W-2G. When you have gambling winnings, you may be required to pay an estimated tax on that additional income.
What's interesting in my case is that I had to gamble on slot machines in order to earn entries into a drawing where I eventually won a "prize". Usually when you gamble on slots in my area anything over $1199.00 gets you a W2-G form for tax purposes. When you win prize like I did....a 2021 Jeep where I decided to take the cash prize instead of $35,000 I was issued a 1099-MISC. I was unable to use my slot machine losses to offset the 1099-MISC. prize...the IRS rejected my return. But since I had to gamble on slots to earn entries into the prize drawing...perhaps it should be handled in a different manner.
So essentially my prize was just added to my income and I was not able to use my slot losses to offset the prize dollars. Good thing I am retired so my tax liability was still low, after all, taxes are "on sale" right now, they are low....but I don't want to pay any more than I actually owe!
Thanks for the help on this topic.
I disagree with @@ColeenD3 because of the case law cited by @dakrebs https://ttlc.intuit.com/community/taxes/discussion/re-can-gambling-losses-be-deducted-[product key removed]ngs-reported-on-a-1099-misc/01/2536279#M908987
dakrebs
2 weeks ago : " ...
Tax Court case, Libutti vs. The Commissioner dated March 7, 1996. In that case, a heavy gambler (Libutti) spent millions of dollars gambling at a New Jersey casino. The casino, in turn, and as an enticement to frequent the casino, gave Libutti expensive gifts, including exotic cars, diamond jewelry, expensive travel vouchers, etc. exceeding $2.5 million in value. The casino issued 1099-Misc forms to Libutti for the value of these "comps" or gifts and Libutti, in turn, applied his gambling losses against all of the 1099-Misc income. The IRS took the position that Libutti could not offset his losses against such gifts (comps). However, the Tax Court sided with Libutti, in essence saying that the strong relationship between his gambling activities at the casino, and the casino's providing comps or gifts to Libutti all fell into the meaning of "gains from wagering activities" and, therefore, he could offset his losses against both the wagering winnings (gains) as well as the comps (gains). They pointed out the obvious in saying that such gifts or comps never would have been given to Libutti except for his gambling activity. In other words, the character of his gains was the same regardless of how they were received or on what forms they were reported. There is a similar relationship between gains from slot machine play, and gains from drawings where the tickets for the drawings are earned because of, and only because of, machine play. Though the gains from the slots are reported on Form W-2G, and the gains from the drawings are reported on Form 1099-Misc, the wagering losses for machine play can be offset against both.
"
Yes you can. See reply with case law and rationale from retired CPA, @dakrebs . I think you just add the 1099misc amount to line 8b gambling winnings and then you can use the gambling losses from your win/loss statement to offset those winnings.
Yes you can. See reply with case law and rationale from retired CPA, @dakrebs . I think you just add the 1099misc amount to line 8b gambling winnings and then you can use the gambling losses from your win/loss statement to offset those winnings.
Turbo Tax does not allow this....at least I don't think it does when using the guided method. I entered the "prize" as a 1099 Misc and it does not consider any 1099 to be gambling winnings. The other suggestion here...(about comps and whatnot...) don't apply to me since I am not a "professional gambler" which I thought might open me up to having to pay into other fees of the self employed.
So now what? I've already filed my federal and state taxes. I got a refund from the State as too much was withheld.....so apparently my taxes were done correctly or they would have notified me and made an adjustment or contacted me. The 100 MISC I got "just" increased my income dollar amount and I paid the tax that was due for my adjusted income. I would LOVE to write off the $35,000 win because I have more dollars in losses from gambling over the whole year and could easily include it. I have a win/loss statement from several casinos I visit. Would you suggest I see a tax professional to help with an amended return our should I try to do it myself with Turbo Tax. Since I have never done an amended return I am not sure if Turbo Tax has this ability to help me do this. I might end up getting another refund that would offset the cost of a tax professional. Or I could just forget about the whole thing and be happy with what I won! Thanks to everyone here for advice. I honestly don't think Turbo Tax software dealt with this situation very well. Cheers.
You can amend your return in TurboTax @dcc56 if you want to follow @REvans2001's suggest.
Remove the 1099 and enter it as part of your gambling income.
To amend your tax return: How do I amend my 2021 return?