Can I deduct my gambling losses?
If you itemize instead of taking the standard deduction, you can deduct gambling losses up to the amount of your winnings.
For example, if you had $10,000 in winnings with $7,000 in losses, the loss would offset (reduce) your taxable winnings to $3,000 ($10,000 – $7,000 = $3,000) and you'd only pay tax on $3,000 instead of the full $10,000.
If the situation were reversed and you had $7,000 in winnings with $10,000 in losses, you wouldn't be able write off the $3,000 net loss, nor could you carry it forward to next year's return. On the bright side, your $7,000 winnings would not be taxed, as your losses completely offset your winnings. Again, you'd need to itemize deductions to realize this benefit.
For a more in-depth article about gambling loss deductions, click here.