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Level 4

Gambling Winnings for 2018

I had a question on gambling winnings for 2018. From my research a casual gambler can use the session accounting method to track winning and losing sessions (winning sessions entered under Miscellaneous Income for Schedule 1 and losses entered as an Itemized Deduction). My questions is about how to enter information into Turbotax when using the session accounting method if you have received W2G's for 2018.

 

Let me share an example:

 

On 01/15/2018 I received a W2G for $1,300 however from my session for that day ended up as a $1,000 loss.

 

How would I handle the entry of that into Turbotax? In years past I would enter the W2G for the $1,300 then an itemized deduction of $1,300 ( capping the loss to extent of win). Under the session accounting methodology I should technically not have to enter anything for Miscellaneous Income since my net session result was a $1,000 loss.

 

This year it is highly advantageous for me to use the session accounting method as it will result in tax savings for my state taxes (my state also recognizes the use of session accounting for gambling wins).

 

Can turbo tax handle this methodology for tracking gambling income?

3 Replies
Highlighted
Employee Tax Expert

Gambling Winnings for 2018

In Turbo Tax, you can enter your winnings as Gambling Income.  To report the losses- in Miscellaneous Income go to Other Reportable Income. Write “Revenue Procedure 2015-X” as the description and enter the amount of session losses as a negative number.  This will net the session losses above the line, but still report the total winnings.

 

NOTE: The rule of losses not exceeding winnings still applies so you are audited, you MUST provide the IRS with a written log which includes the date, winnings and losses for each session (so no individual loss can be more than the winnings per session)

 

Under the safe-harbor, a taxpayer would recognize a wagering gain if, at the end of a single session of play, the taxpayer’s total gains exceeded his or her losses and would recognize a loss if, at the end the session, the total amount of wagers exceeds the amount of payouts.  A session would be treated as beginning when a gambler places the first wager on a particular type of game and ending when the same gambler completes his or her last wager on the same type of game before the end of the same calendar day, i.e., beginning on or after 12:00 a.m. and ending at 11:59 p.m.

KR
Level 3

Gambling Winnings for 2018

Does this mean that in a single session in which I won $42,000 (13 w2g's on one machine) and continued to play that machine until leaving with a net gain of $5,000, I would have to pay taxes on the $5,000 even if I returned the next day and lost it all?

Level 4

Gambling Winnings for 2018

I have been researching this and it appears a SESSION ends at the end of the day, or in some cases, when you "cash out".  

 

Some folks tried to call the entire year a session and lost. See this post