The is a perennial problem that is never properly addressed:
A gambler receives a 1099-Misc for a big win, not a W-2G. The gambler itemizes his deductions, and he has documented losses exceeding the 1099-Misc income.
The question is:
Does he input all of the 1099-Misc information as common income into TurboTax? If so, since the 1099-Misc is not a W-2G, there is no place in TurboTax to offset this 1099 income with gambling losses unless he reports the same amount again in the less common income section as a gambling win. In that case, the income in now double reported and TurboTax will only allow the gambler to deduct one of the two amounts. If the gambler ignores inputting the 1099 information directly into TurboTax and instead simply reports the income in the less common income section without the specific 1099 details, he risks alerting the IRS that he has not reported the 1099-misc form.
Some suggest filing the 1099 Misc using negative numbers for the win, and then reporting both the win and losses in the less common income section. This works, but may also set off an IRS bell.
Any final thoughts?
