I enter gambling wins and losses when prompted, however when it comes down to the final screen, the tax return is only taking into account the wins. My winning amount equals my losses and I am itemizing deductions. My itemized deductions are greater than the standard deduction also...
Gambling losses are indeed tax deductible, but only to the extent of your winnings and requires you to report all the money you win as taxable income on your return.
If you are itemizing and you already entered into the return your gambling winnings and losses, then the losses are a part of the Sch A deduction
The winnings go on the Sch 1 and then the 1040.
The deduction is only available if you itemize your deductions. If you claim the standard deduction, then you can't reduce your tax by your gambling losses.
The IRS does not permit you to simply subtract your losses from your winnings and report your net profit or loss.
And if you have a particularly unlucky year, you cannot just deduct your losses without reporting any winnings. If the IRS allowed this, then it's essentially subsidizing taxpayer gambling.
The bottom line is that losing money at a casino or the race track does not by itself reduce your tax bill.
You need to first owe tax on winnings before a loss deduction is available. Therefore, at best, deducting your losses allows you to avoid paying tax on your winnings, but nothing more.
Yes, Gloria thank you. I am itemizing and my itemized deductions are greater than the standard deduction.
When I enter in the gambling winnings, my required tax payment goes up. There is no affect when I enter the gambling losses afterward.
Unless all your itemized deductions are MORE than the stranded deduction there is no benefit.
2020 standard deductions
$18,650 Head of Household
$24,800 Married Jointly
For 2018 - 2020 many taxpayers that itemized in the past will find that they can no longer itemize because the standard deduction has doubled so all of their itemized deduction s no longer exceed the standard deduction.
Only if all itemized deductions exceed the standard deduction will it be of benefit.
Not all itemized deductions count the full amount. Medical expenses are reduced by 7.5% of AGI so if your AGI is $30,000, for example, then only medical expenses more than $2,250 would be an itemized deduction.
The 2018 tax law also caps the total of Sales tax OR State and local income tax, Property (real estate and personal property) taxes at $10,000.
Mortgage interest on loans after Dec 16, 2017 may be limited.
The Mortgage must be secured by the property to qualify.
Interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer’s home that secures the loan.
You can check the actual amount of itemized deductions by using the Search Topics for "itemized deductions, choosing" (under "My Account, Tools" in the online versions). Click on "Change my deduction". That will display the actual amount of itemized deductions vs. the standard deduction. (Be sure to uncheck "Change my deduction" after checking it so you do not lock in the wrong deduction.
Add an additional $1,300 for over age 65 or blind
This amount increases to $1,650 if the taxpayer is also unmarried.
Itemized deductions do not reduce tax dollar-for-dollar, it only reduces taxable income. See your 1040 form lines 10c & 11 and the tax on line 16.