Winnings from gambling and contests—including office pools—are reported on line 21 of IRS Form 1040. But Line 28 on Schedule A is bust. Losses for the year, meanwhile, are reported on line 28 of Schedule A from Form 1040. Gambling losses can’t outweigh winnings. An unlucky streak has its limits when it comes to preparing your tax return. Jan 03, 2020 Gambling Losses You may deduct gambling losses only if you itemize your deductions on Schedule A (Form 1040 or 1040-SR) (PDF) and kept a record of your winnings and losses. The amount of losses you deduct can't be more than the amount of gambling income you reported on your return.
When filing Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, use Schedule K to deduct debts that the decedent owed at death and obligations, such as mortgages or liens, which the decedent’s estate is liable for. Schedule L is used to report any net losses that occur during estate administration. Expenses incurred in administering property not subject to claims should also be reported in Schedule L.
Schedule K: Deducting the decedent’s debts and obligations
Report all unsecured debts that existed at the time of the decedent’s death, whether or not mature (currently due), and that relate to property not subject to claims of the decedent’s creditors on Schedule K. Your state law determines which items of property are subject to claims. For each item, include the name of the creditor, the nature of the claim, the amount, and the period of time, if specified.
The following are examples of some deductible debts you might include on Schedule K:
Household expenses accrued before death.
Property taxes accrued before death.
Federal taxes on income received before the decedent’s death. If it’s a joint liability with a surviving spouse, the estate would only be liable for the decedent’s portion under local law.
Unpaid gift taxes on gifts the decedent made.
Certain claims of a former spouse against the estate if they meet the requirements set out in the instructions to Form 706, Schedule K.
Professional fees, such as attorneys’ fees, or accountants’ fees for services rendered during life.
Amounts due on notes, judgments, and accrued interest through date of death.
On the bottom half of Schedule K, report any obligations which are:
Secured by mortgages or other liens for which the decedent was personally liable, and for which the estate is now liable.
On property you included in the gross estate at its full value, unreduced by the mortgage or lien
If the decedent and his or her estate aren’t liable for the mortgage or lien, include in the gross estate only the value of the property net of the debt. You don’t deduct any portion of such debt on this schedule.
Schedule L: Deducting estate losses
Any losses (from theft, fire, storms) that occur during the settlement of the estate should be reported on Schedule L. These losses are deductible unless they’re reimbursed in some way (by insurance, for example). Losses aren’t reflected in the alternate valuation of the property. You cannot take the loss on the 706 and on the applicable income tax return, so consult relative tax rates and choose wisely.
Deduct expenses you incur in administering property included in the gross estate but not subject to claims on the bottom half of Schedule L: Net losses during administration and expenses incurred in administering property not subject to claims. Report the expenses relating to administering a decedent’s revocable trust here.
You may only deduct those expenses paid within the period of limitations, typically three years after the 706 is filed. The expenses must relate to settling the decedent’s interest in the property or vesting good title in the beneficiaries. Any expenses deducted on an income tax return may not be deducted here.
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If you had a successful night at the slots or poker tables, you're going to have to share some of the lucky proceeds with Uncle Sam. The Internal Revenue Service generally requires that you report your gambling winnings and losses separately when you file your taxes rather than combining the two amounts.
Record Keeping
As you gamble during the year, you need to keep records of your winnings and losses so that you can support whatever figures you report on your taxes. The IRS permits you to use per-session recording, which means that instead of recording whether you won or lost each time you pull the slot machine, you can simply record your total for the session. Your records should include the date and type of gambling, where you gambled and if you gambled with anyone else, such as a home poker game. If you win more than $600, you should receive a Form W-2G from the casino.
Taxable Winnings
When figuring your gambling winnings, only include the winnings from each session rather than using losses to offset your gains. You have to include gambling winnings even if you didn't receive a Form W-2G from the casino. For example, if you gambled six times during the year, winning $100, $3,000, $4,000 and $6,000 but losing $5,000 and $2,000, your gambling winnings for the year are $13,100. This amount gets reported on line 21 of your Form 1040 tax return.
Gambling Losses
To claim your gambling losses, you have to itemize your deductions. Gambling losses are a miscellaneous deduction, but -- unlike some other miscellaneous deductions -- you can deduct the entire loss. The deduction goes on line 28 of Schedule A and you have to note that the deduction is for gambling losses. For example, if you lost $5,000 on one occasion and $7,000 on another, your total deduction is $12,000.
Gambling Loss Limitation
Gambling Losses Tax Write Off
You can't deduct more in gambling losses than you have in gambling winnings for the year. For example, suppose you reported $13,000 in gambling winnings on Line 21 of Form 1040. Even if you lost $100,000 that year, your gambling loss deduction is limited to $13,000. Worse, you aren't allowed to carry forward the excess, so if you had $87,000 in losses you couldn't deduct last year, you can't use that to offset the gambling income from the current year.
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1040 Schedule A Gambling Losses
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About the Author
How To Determine Gambling Losses
Based in the Kansas City area, Mike specializes in personal finance and business topics. He has been writing since 2009 and has been published by 'Quicken,' 'TurboTax,' and 'The Motley Fool.'