I had $7000 in W2G lottery winnings and $7000+ in losses. So why did I have to pay taxes on it when gambling income was $0?

[DoninGA · Accepted solution]

Gambling losses can only be deducted up to the amount of the gambling winnings.  Gambling winnings are reported on Form 1040 Schedule 1 on Line 21 as Other Income.  Gambling Losses are reported on Form 1040 Schedule A as a Miscellaneous itemized deduction.  Gambling losses are not a one-for-one reduction in winnings.  Your total itemized deductions reported on Form 1040 Schedule A must be greater than the standard deduction for your filing status to have any tax benefit.

Standard deductions for 2018 

• Single - $12,000 add $1,600 if age 65 or older
• Married Filing Separately - $12,000 add $1,300 if age 65 or older
• Married Filing Jointly - $24,000 add $1,300 for each spouse age 65 or older
• Head of Household - $18,000 add $1,600 if age 65 or older