From the information you provided, it appears that the standard deduction gives you a bigger refund, or less of an amount due, than taking the itemized deductions.
1. If the federal standard deduction is greater than your Itemized Deductions, the gambling losses are considered to be part of your standard deduction. The standard deduction is a fixed dollar amount, based on your filing status and age, that the IRS lets you take off (deduct) from your taxable income.
2. If you itemize instead of taking the standard deduction, you can deduct gambling losses up to the amount of your winnings.
For example, if you had $10,000 in winnings with $7,000 in losses, the loss would offset (reduce) your taxable winnings to $3,000 ($10,000 – $7,000 = $3,000) and you'd only pay tax on $3,000 instead of the full $10,000.
If the situation were reversed and you had $7,000 in winnings with $10,000 in losses, you wouldn't be able write off the $3,000 net loss, nor could you carry it forward to next year's return. On the bright side, your $7,000 winnings would not be taxed, as your losses completely offset your winnings.
Again, you'd need to itemize deductions to realize this benefit.
For a more in-depth article about gambling loss deductions, click here.
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