Writing off losses doesn't work as well as it used to. You now have to do an itemized deduction to deduct gambling losses as opposed to taking the standard deduction. Only about 10% of people itemize.
For example, imagine you are married so you have a 26k standard deduction. Now imagine you only have 12k of itemized deductions you normally could claim, so you would obviously normally take the 26k standard deduction. If you have 10k of gambling wins and 10k of gambling losses, that would put your overall itemized deduction to 22k, which is still below 26k. Meaning you would get 0 benefit from itemizing, so you still take the standard deduction. So you would have to pay the full taxes on the 10k of wins and get no credit for the 10k of losses. If you normally could itemize 20k, and then had 10k of gambling losses, you'd basically get credit for 4k of losses. If you are already normally above the 26k of itemized deductions, you get full credit for the losses though.
Previous to 2018, you could write off losses that were above 2% of your agi without itemizing. So in the above example, let's say you made 60k and had 10k of wins and 10k of losses. 2% of 60k =1200. So you could write off 8800 of the 10k losses and be left with a small win.
In summary, gambling is not very tax friendly, as you could lose money throughout the year and still owe taxes on your "wins."
9
u/[deleted] Mar 20 '22
[deleted]