Despite this, the standard deduction would effectively serve as the losses allowed to offset the gambling winnings, plus an additional amount. If Joe Taxpayer takes the standard deduction, he has to report the winnings as other income but does not get to use the losses. There is also a caveat to this general rule in that the ability to use gambling losses to offset winnings is only afforded to those who itemize deductions. Should You Itemize to Use Gambling Losses to Offset Winnings? For this primary reason it is vital to keep detailed records of gambling activities. The amount included in gambling losses is also not merely the wager amount, but inclusive of travel to and from the tournament venue. If Joe Taxpayer wins $5,000 but places losing bets totaling $8,000, he can offset the winnings, but the excess $3,000 in losses is not reported anywhere, nor is it carried over to the following year. It is vital to keep detailed records of gambling activities including wins, losses, and travel.
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