I’ve received a couple of calls in the last few days from clients wanting to check on a story they’ve heard about gambling losses. The story going around is that we will no longer be able to deduct gambling losses on our tax returns. This is absolute news to me and I hope if I’m wrong someone will let me know.
Currently, we can deduct our gambling losses, up to the reported gambling winnings on Form Schedule A as a miscellaneous deduction not subject to the 2% floor. That means a taxpayer who wins say $5000 from any kind of gambling, casino, lottery or office pool and can document losses of $5000 can add the losses to the rest of their itemized deductions on their Schedule A. How much it helps offset their winning depends on what other itemized deductions that have and their filing status. (The law says you can deduct losses not that it will actually help you.)
What my clients have been told was that the ability to deduct gambling losses was repealed on July 1, 2013. Actually one was very specific that he had been told that the new law went into effect on July 1st and was retroactive to the first of 2013.
Congress would have to change the tax code for us to lose the ability to deduct gambling losses up to the amount of winnings. That has not happened and I haven’t heard of any bill being considered which will do that. I have also checked all the message boards and forums to which I belong and run internet searches and I can’t find anything about changes to deducting gambling losses.
These clients are also mentioning that they have been told about changes to Kansas and Oklahoma taxes and gambling losses. Again, I have not been able to find anything official. That doesn’t mean that someone hasn’t made a suggestion for changes and that started the rumor.
Bottom line, there has been no change to deducting gambling losses on your personal 1040 return that I can find. If I find anything different I will post it here.
Thanks to Brad at taxdood for pointing out that Ohio just replealed gambing losses as an itemized deduction. There is his blog post about the issue.