As the year wraps up, I looked at my gambling numbers… seems like I’ll end the year down by around $60K. Made $400K in winnings but took $460K in losses. Can I actually deduct that $60K from my federal tax return? How does this work?
You need to report $400K as income, then itemize to deduct $400K in losses. You’re still stuck with that $60K.
DeductionsDetective3 said:
You need to report $400K as income, then itemize to deduct $400K in losses. You’re still stuck with that $60K.
So is there any real point in doing this? Seems like it just evens out to zero anyway.
@Blaze
Legally, you’re supposed to report the $400K in winnings. The upside of itemizing is that you get to deduct a higher loss than you would with the standard deduction.
@Blaze
It doesn’t fully cancel out because gambling losses are an itemized deduction, so you lose out on the standard deduction.
@Blaze
The benefit here is being able to report $400K in losses against $400K of winnings. Since you have to report the income, you might as well claim the losses to offset it.
But to be real, maybe consider cutting back on gambling. Or if you’re set on it, look into stocks—they’re taxed better. No joke, though, if gambling is a problem, I hope you get help. It’s rough, and with things like online casinos and sports betting, it’s way easier to spiral these days. I’ve had family deal with similar struggles, and it’s a tough path. Taxes are just one part of why gambling can be tough.
You’d need to itemize to claim losses unless you’re a professional gambler. Itemizing means giving up the standard deduction and replacing it with the total of your itemized deductions, including gambling losses.
But you can only claim losses up to the amount of your winnings.
Blaze said:
@Vernon
So is there any real benefit in doing this deduction?
If you don’t claim your losses (up to your winnings), you’d be paying tax on $400K in winnings instead of zeroing out the tax on those winnings.
Blaze said:
@Vernon
So is there any real benefit in doing this deduction?
Yes, since you’re required to report the $400K in income. Reporting the $400K in losses will lower your tax bill.
Blaze said:
@Vernon
So is there any real benefit in doing this deduction?
Yes. You can’t deduct losses over what you won, but you should still deduct losses up to that amount.
You’re stuck with the excess loss. This rule’s been in place a long time.
No, gambling losses can only offset gambling winnings. The $400K in winnings has to be reported, and to claim $400K in losses, you need to itemize on Schedule A. The extra $60K isn’t deductible.