I had a $1000 gambling win in 2016; $1000 in losses too. I'm planning of claiming both. Does the losses cancel out the winnings? It isn't changing my refund (up)


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For Federal purposes, while gambling winnings go directly onto your return as income, gambling losses (up to the amount of the winnings) are only itemized deductions that go on Schedule A.  This means that its possible you may not have enough total itemized deductions to offset the gambling winnings.  You are not allowed to directly offset your gambling winnings with losses.

Example:  You have $1,000 in winnings and $1,000 in losses.  You have to add the income to your return.  You can then take an itemized deduction of $1,000 for the losses.  However, the standard deduction is $6,300 for a single taxpayer and $12,600 for married filing joint, so you need to have more other itemized deductions on your return (property taxes, mortgage interest, charitable donations, etc) to really be able to take advantage of the deduction for losses.   

Excerpt from IRS:  "You can claim your gambling losses up to the amount of your winnings on Schedule A, Itemized Deductions, under ‘Other Miscellaneous Deductions.' You must report the full amount of your winnings as income and claim your allowable losses separately. You cannot reduce your gambling winnings by your gambling losses and report the difference. Your records should also show your winnings separately from your losses.



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