Should I write the money I bet as the cost of the bitcoin? I received bitcoin as my winning in sports betting, but I lost more money in 2021. Can I say that?

[Vanessa A]

This sounds like the bitcoin was your gambling winnings.  This means you cannot claim your betting cost as the cost basis, but if you are taking the itemized deduction instead of the standard deduction, you can take a deduction for your gambling expenses.  Gambling expenses are only deductible up to the amount of your winnings.  

If you are itemizing your return you will take the following steps to deduct your gambling expenses:

• Federal
• Income and Expenses
• Show More next to Less Common Income
• Start next to Gambling Winnings
• Enter your gambling winnings click continue
• After entering all of your winnings, you will be asked for your gambling losses.  Enter the bet amount on that page. 

[CA_Tax_Man]

@Vanessa A 

Hi there,

Thank you for your response to the above question about gambling winnings. I understand that you are able to deduct your losses from the site/casino up to the amount of your reported winnings. 

My question is regarding your directive to input your gambling losses..

If my total losses for the tax year exceeded my winnings, When I input my gambling losses, do I only input up to the amount of my winnings? Or do I input my total losses for the tax year and the Turbo Tax system will only apply up to the amount of my total winnings for the tax year as my deduction?

[Vanessa A]

When I input my gambling losses, do I only input up to the amount of my winnings? Or do I input my total losses for the tax year and the Turbo Tax system will only apply up to the amount of my total winnings for the tax year as my deduction? You can enter the total amount or the amount up to your winnings.  Either way, TurboTax will limit your losses to your winnings.  

Be aware, in order to be able to claim the losses, you must itemize your return.  So, if your itemized expenses are not greater than your standard deduction, you still will not receive any credit for your losses. 

Gambling Losses

Standard versus Itemized Deduction

Itemized expenses include mortgage interest, state and local taxes up to $10,000, medical expenses in excess of 7.5% of your AGI, charitable donations, gambling losses up to winnings and casualty and losses in excess of 10% of you AGI with the first $100 not counting towards the loss.  Your health insurance and all medical expenses are only deductible for the amount that is over 7.5% of your AGI.  This means if your AGI is $50,000, then the amount that is over $3,750 is deductible.  

Then your total itemized expenses would need to be greater than your standard deduction below in order to benefit from your insurance premium payments. 

The 2023 Standard Deductions are as follows:

• Married Filing Joint (MFJ)              $27,700
• Married Filing Separate (MFS)      $13,850
• Head of Household (HOH)             $20,800 
• Single                                                     $13,850                                

Blind and MFJ or MFS add $1,500

Single or HOH if blind add $1,850