Limited even moreso for certain people -- those who don't itemize. It's obvious that the poorer a person is the less likely he is to itemize. So I wonder if somehow this is meant to try to limit gambling amongst the relatively poorer people in our country ? God knows they could use the offset more than the wealthier folks. Of course, most people probably aren't reporting gambling income that isn't reported to the IRS.
It's obvious that the poorer a person is the less likely he is to itemize. So I wonder if somehow this is meant to try to limit gambling amongst the relatively poorer people in our country ? God knows they could use the offset more than the wealthier folks. Of course, most people probably aren't reporting gambling income that isn't reported to the IRS.
Even "rich" people aren't allowed to deduct losses greater than winnings, in other words your gambling can't amount to a net deduction against income, it's always going to be either net taxable income, or at best, zero income. (There's still the fact that gambling income increases AGI, while gambling loss deductions don't decrease AGI, and high AGI can trigger all kinds of other tax implications).
I seriously doubt the intent of the tax law was to limit gambling (most gamblers wouldn't care anyway is my guess), but simply to not reward gamblers with a tax break. It's very similar to treatment of hobby income, for much the same reason: it's recreational, not business-related.
Which links to the previous comment about whether $50K of losses would mean someone is a professional gambler - no, it's not the dollar amount by itself that matters. It's whether the activity is conducted as a trade/business, or recreation/hobby.
And, to quote TheTaxBook (professional desk reference), "Regardless of whether a taxpayer?s gambling activity is a trade or business, IRC section 165(d) limits losses from gambling to the extent of gains from such transactions. "
If you want to understand the meaning of a session and tax law for nonprofessional gambling you will need to read various tax cases that have established the interpretation of Section 165. You need to start with
Another horror of gambling winnings is the amount pushes up your taxable portion of social security benefits and if you don't itemize you really get screwed especially if you lost it all the next day. IRS wants to lower tax trigger to $600 on one slot pull from current $1200.
bw
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