Gambling winnings/losses issue

[tina878]

I have this exact same issue. I too was baffled because before I put in my my W2-G income/loses turbo tax told me to take the standard deduction. After I put in my offsetting wins/losses, my tax due went up over $1000. I suspect this is it. 😥

[JillS56]

Yes, most likely the reason is that you are unable to itemize and cannot take the losses resulting in higher taxes.  

[mary043]

I can file deductions.  What Turbo tax is doing is subtracting my losses from my winnings so I have 0 gambling winnings.  This is not correct.  I have gambling winnings and should be able to deduct them because I can itemize.  I checked the government info and gambling losses should be on your itemized deductions.  If I file, it will look like I am not claiming my winnings for which I have a gambling WG form or whatever it is.  The desktop turbo tax needs corrected so that winnings are on the income and losses are in the itemized deduction form.

[DMarkM1]

In TurboTax gambling winnings show on line 8 of your form 1040 as other income.  Gambling losses show on line 16 of Schedule A as an itemized deduction.  You enter the losses in the "Wages and Income" section, but they do show as itemized deductions.  

You can preview your form 1040 in online versions using the steps below.  You can use the forms mode in desktop versions. 

1. Select "Tax Tools" in the left hand menu
2. Select "Tools"
3. Select "View Tax Summary"
4. Select "Preview My 1040" in the left hand menu

[AnnParker]

In general, if your gambling losses equal or exceed your winnings, you may be able to deduct those losses on your tax return. However, there are limits and restrictions on how much you can deduct, and it may depend on your specific situation and the state you live in. It's always best to consult with a tax professional or use a reputable tax software program to ensure accuracy when filing your taxes.
Additionally, it's important to gamble responsibly and only with money that you can afford to lose. While it can be fun and exciting to try your luck at the casino or on sports betting sites like [link removed] it's important to approach gambling with caution and understanding that it is always a game of chance.

[philmasch]

I'm assuming you were taking the standard deduction before you put the gambling in. The standard deduction gives you a "free' deduction of $15k if single or $25k if married. That is a net positive for you for lack of a better term. The net positive is what gives you the refund before the gambling income and loss is entered.

When you enter your gambling wins, say $50,000, and your gambling losses of $50,000, you lose that net gain of the standard deduction because now that additional $15k or $25k standard deduction gets wiped away and gets replaced by the gambling losses of $50k.

$50k of additional income and $50k in itemized deductions is a $0 net benefit.

$0k in additional income and $15k or $25k in standard deduction is a net gain, hence the refund.

You.go from a positive transaction (taking the standard deduction) to a neutral transaction (itemizing dollar for dollar of that income).

[LMurray1]

Hi Philmasch,

  Thanks for responding to my question from last year. I completely agree with your comments.

  This year, my W-2 G gambling wins will be close to $100,000. Therefore, I have no choice but to forgo my standard deduction and take my gambling losses which are close to $100,000 as a deduction. Otherwise, I would have $100,000 in additional income with only the standard deduction to offset that income. Life would be a lot simpler if the IRS would increase the W-2 G threshold from $1200 to $5000 before a W-2 G is issued (accounting for 70 years of inflation). This W-2 G threshold has been in place from the 1960s and needs to be updated.

  Thanks again. 

[Opus 17]

All gambling winnings are reportable taxable income, even if they are not reported on a W-2G.  If you were to be audited, the IRS can look at every transaction in your bank account and identify all the gambling winnings that you didn't report, and assess taxes and penalties, and the burden of proof is on you (not them) to show they are wrong.  Raising the reporting threshold would make it easier for people to avoid taxes, not change what is taxable, so I don't think that's likely to happen.  

[Hinmity24]

I am having the same issues this year.  After adding in my gambling wins of 34000,  my tax owed went up a few thousand.  After entering my losses of 34000, the taxes owed stayed the same.  I have itemized my deductions well over the standard deduction.  Is there an issue with the software?  The final statement shows I'm paying income taxes on my wins plus my regular employment wages.

[BrittanyS]

The gambling losses are only deducted up to the amount of your winnings.  Make sure your gambling winnings have been entered first and entered in the correct location.  To make sure the amounts are calculated correctly, follow these steps in TurboTax:

1. Go to Federal Taxes tab ( Personal Tab in Self-Employed)
2. Click Wages & Income
3. Select I'll choose what I work on
4. Then go to Less Common Income
5. Click Gambling winnings
6. Once you have entered in your gambling winnings click on Continue. Once you finish the questions for this area you will then be able to enter your gambling losses.

See the link below for more information:

• Can I claim gambling losses?