Getting screwed on my Gambling "income" this year even though I got no cash out of it.

I forgot that the law mostly allows only those who own homes (let's be

honest that's what makes most people able to itemize) to deduct the

losses on their gambling income to offset the wins.

2014. I won about $300 or so. But with the winnings (without ever receiving

a cent from the house) I bet on other football games that I lost. So in my

"bucket" at the end of the year I had about $25. Add back pending bets as of

year-end and I was left with maybe $100.

received a dime from the house! Yes, I got the benefit of extra bets with

those wins but still sucks that mortgage holders and those who itemize get

to deduct the losses and I don't basically because I rent.

Yep! Winnings count as income and losses must be subtracted from the income. Not much different from that of stocks and bonds, though in the latter, if losses are large only a portion is counted in the given year

--the remainder carries forward

Actually, you're wrong. You come out better by not owning a house. The IRS gives you a standard deduction whether or not you actually spend that money on deductible items. People who itemize must spend every dollar they claim as a deduction. Then they only get back a fraction of that expense at their marginal tax rate.

Ira Smilovitz

The rent you pay reflects the fact that your landlord gets to deduct his mortgage on the rental property.

The landlord also has to include my rent as income. I don't get what you're saying.

Why do you think you never received "a dime from the house!". Of course you did. You just choose to reinvest it in more wagers. That was your choice and has no effect on the taxation of your winnings.

Rental property is an investment and a certain return on that investment is expected. The amount of return expected is based on rates available from alternative investments, risk, and the amount of effort required to manage this particular investment. If the expected after tax return is x% given the fact that mortgage interest is deductible, that same x% return would be expected even if the mortgage interest is not deductible. If mortgage interest is not deductible, rents must rise in order to achieve that same x% after tax return.

Allowing homeowners a mortgage interest deduction puts individually owned houses on the same footing, more or less, as rental property.

For some reason, two of my replies have not shown up.

Maybe this one will. Anyway, I won't rehash them completely here, but let me ask you, other than the level of riskiness, what is the difference in the following scenarios:

I buy Stock Option A on February of a year, sell it two months later for a gain of $200.

I buy Stock Option B in October of a year, sell it in December, for a loss of $200.

Even though I don't itemize, I still get to claim $0 net income from my stock sales.

Now, change nothing in the story above except that I participated in a riskier gamble. That is, instead of buying options and betting on a stock price change, I bet on the outcome of a game.

Why do I get punished > > So basically I have to pay taxes on all the winnings even if I never received a dime from the house!

========================================= MODERATOR'S COMMENT: Your posts are not appearing because you are topposting. Please place your comments after the portion of the post(s) you are replying to, and cut out the unnecessary part of the prior post that you are not replying to.

You point out this one item in the tax code to show the tax code is not fair? I can point out dozens with a real negative effect on people and the economy.

This code section was undoubtedly written due to many non-professional gamblers pulling all sorts of scams on their tax returns.

What does gamblers in general performing tax shenanigans have to do with letting those who itemize combine their losses and gains for the most risky bets ( like sports gambling , as opposed to stock option betting), while not allowing those who don't itemize the same benefit ?

Leaving aside the other (correct) comments about how taking a standard deduction is actually a better deal tax-wise, are you correctly taking into account your basis in each wager when figuring your gross income?

Actually it would be nice if you could net your daily gambling winnings and losses and repoprt the difference as gambling winnings or losses.

Ignoring the case of professional gamblers who can do this netting, a recreational or casual gambler can also do this (claim daily cash out less cash in) if all three of these elements are present:

1. Complete substantiation -- keep a daily log book as described in Pub 529,
2. Undue burden -- it would be an undue burden on the taxpayer to have to keep records on every throw of the dice, deal of the cards, spin of the wheel, etc, and
3. Accession to wealth == test is met if it would be quite inconvenient to turn your winning tickets, card tally, betting slip, etc into cash.

While slots action, craps, many table games, meet the above three elements, sports gambling, keno, bingo, lotteries do not.

Perhaps nothing, but when there are perceived problems, including some people being "too productive" or "too successful", THEY deal with the "problem" via tax codes and regulations, many of which make no sense and are even counterproductive.

Yep. The amount won on a bet, above and beyond what was risked, is what I used. To be honest, when I was making my bets, I just assumed I would be able to offset the losses up to the win amount in the same year. I guess I had just forgotten that I would not be allowed to do that since I don't itemize. Then, when I went to do my taxes in April 15th, I was presented the rules and of course realized the error of my ways. No more betting for me until I'm able to itemize (buy a house with a mortgage instead of rent). Not a big deal really I guess anymore. Yes the tax code is full of this type of stuff. I know I'm sounding like a baby about this, but it just kind of irked me I guess.

The problem with figuring out my basis is that since I assumed I would be able to deduct losses up to the win amount, there was going to be a simple formula for me for tax purposes. I easily knew how much I put in the "bucket" (it's on the credit card statement), so I simply made note of my balance at year end and added back any pending bets (the house takes out the basis immediately upon bet placement). If the balance + pending bets was more than what I put in, I was going to pay tax on that difference.

Of course, what happened instead when I was confronted with the real rules was I had to go back and consider each individual bet. The ending balance told me nothing. I could have won $50,000 and lost $50,000 and I would have been paying taxes on the $50,000 since I don't itemize. It's kind of annoying but those are the rules and I'm going to follow the rules.

If I were allowed to deduct my rent, which is about $1,000 / month, I would be better off itemizing than claiming the standard deduction.

Now in some cases I get what you're saying. Say, for example, I still lived at home with my parents and paid no rent. Then the standard deduction is wonderful to have and helps me tremendously.

If you had $50K of gambling losses, you almost certainly *would* be able to itemize, unless your AGI was a few million or so (in which case AGI phaseout and AMT might negate any deduction, I haven't tried to figure out the thresholds).

Along the lines of Art Kamlet's reply, see also IRS Notice 2015-21, in which the IRS proposes a new gambling Safe Harbor to define a "session of play" where you could at least net your wins and losses from a single session.

I don't equate sports gambling to stock option transactions, although I grant you they might seem similar in the end.

If you consider the history of the two activities under tax and other laws, it seems our society at large agrees. After all, it wasn't that many decades ago that almost all gambling in U.S. was considered illegal in most places, except limited horse racing bets and the Irish Sweepstakes (which was also horse racing, I think). Now about the only limitation is that you are looking at some stricter tax rules for deducting losses.

If someone has $50,000 of gambling losses, wouldn't that be enough to claim that the person is a professional gambler (doing it part time)?

Ah yes, my mistake. Of course at $50,000 I could itemize. I should have typed $5,000, not $50,000. Interesting. I wonder how they define a "session." I will read it. Thanks.

A profesional gambler has to spend most of his time gambling.