Possible effect of new tax law on gambling

[olds442jetaway]

     I have a feeling I may fit into this scenario and if I do, I certainly will not be the only one. Most of us know that on your Federal tax return to deduct gambling losses up to the extent of winnings, you have to itemize your deductions. For more than a few of us, the new standard deduction amounts will be high enough where we will no longer have to itemize our deductions. Here is the Booby trap as I see it. This is just my opinion, but I'm afraid myself and others are going to fall into this trap. My itemized deductions under the new rules will be much less than the credit I would get for taking the standard deduction for tax years 2018 and beyond. That of course does not count the gambling losses. If I am forced to itemize to deduct my gambling losses, I am going to lose out big time tax wise because if I did not have gambling winnings to declare and offset with losses my standard deduction would be thousands of dollars higher than my itemized deductions. The cap on state and local tax deductions only adds to the bill and reduces my and others itemized deductions even further. This scenario will probably force me to greatly downsize my gambling amounts per session and will also cause the casinos to lose revenue. Not that I care about that part, but I bet the casinos will if they haven't thought about this already.

[Tedlark]

Olds I don't see why you couldn't take the new standard deduction if you count the gaming winnings as income and do not itemize any loses to offset the winnings. I'm not a tax professional but I will be using one to sort out this first year of the new deductions. Next year I can go on my own.

[olds442jetaway]

wont work Ted. Too many w-2Gs. They all go on the front of the 1040 and are added into AGI. The only way to offset those is to itemize your deductions. Most all of my sessions are negative unless I get at least 1 hand pay of 1200 or more. Those are automatically sent to the irs on W-2Gs. Just for arguments sake, lets say ones total gross gambling income was 150k. That goes in as income on the front of ones return and is completely taxable unless you itemize your deductions and write off that entire amount on schedule A. The difference between the standard deduction and itemized deductions will at most be a few thousand bucks and nowhere near the 150k needed to remove to remove that extra 150k from taxable Federal Income. Just as an aside, in Ct. the state on my State Income tax return will get 6 percent or so right off the top on that 150k even if I'm able to write off that entire amount as an itemized deduction. Thats one crazy ass law that never should have been passed in this state and a few others. That is the same thing as buying a hundred shared of a stock for say ten grand. You keep it for awhile and it hasn't moved. You decide to sell it and get your ten grand back and move on. Then you get taxed on the entire ten grand though you made nothing. To me, the Ct. state law is the same thing. Its just plain stealing in my book.

[olds442jetaway]

By the way Ted, the new law as far as I know wont take effect until we file in 2019 for the 2018 year. We should be under the old rules for our 2017 returns as far as I know. There is one more huge change i read about regarding alimony. In the past, lets say the husband pays 30k a year in alimony to his ex spouse. He gets to write that 30k off but the ex wife has to declare that 30k as income. Beginning with divorce settlements made in the 2019 year, that alimony will no longer be taxable to the ex wife and the ex husband will no longer be able to write off that 30k from their income. I read this earlier today in a NY Times article. I assume its accurate, but of course one should get it from the horses mouth being the IRS to make sure that is correct. Of course it could work the other way too where the wife pays alimony to the ex husband. That is not all that uncommon nowdays. Merry Christmas.

[Tedlark]

I was completely brain dead when I read your post olds. You're right; the changes will not take effect until 2018 filing year, which as you said, will be 2019. I mis-read your post and I was thinking that you did not have enough in W2-G winnings (and remember, all other gambling winnings under the W2-G threshold).

I've been filing 1040 with Schedule A itemization for quite some time and sometimes I yearn for the simpler days of 1040EZ.

As for alimony and its taxation that is something I'll probably never need to deal with, no matter which end of it I would find myself on.

Merry Christmas to you sir. By the way; no comment on my red 66 Olds Toronado comment? I believe that car was MT Car of the Year, what a great car that was and I would like to have one sitting in my garage.

[olds442jetaway]

I was wracking my 70 year old brain ted on the Toronado and meant to ask you but I wanted to give myself one more day to try and remember. Now I do. One of my professors at UCONN had that exact car color and all. I got to ride in it once but it was only from one end of the campus to the other in a blinding snowstorm. That Toronado plowed right through everything. I remember asking him what the gas mileage was on the car. He said 9mpg. At the time, I had a very fast 61 Plymouth Fury that I unfortunately totaled before I graduated. It got 13mpg which wasn't too bad in those days. The worst gas mileage I ever got was in my 66 Plymouth Satellite Hemi. It got 6mpg. It was well used already when I got it, but if I had it today, it would be worth more that all of my W-2Gs combined from 2017.

[wildman49]

Olds your right on. To get dollar for dollar from your gambling wins vs losses you need to have $24,000 from every other write off you can find. If your at $21,000 and then add $10,000 in gaming losses your using gaming losses of $3,000 to cover the gap to $24,000. I have had this problem at the $12,000 write off not making it last year now am really screwed with $24,000. I think like you Olds, might have to back off since the wins will turn into taxable wins.

[Tedlark]

The Toronado, Eldo, and Riv were fantastic in the snow because of their big V-8's up front coupled with them being equipped with front wheel drive. My dad had several Eldo's and I'd be hard pressed to think of a time those cars ever had a difficult time in the Chicago snow.

Wildman now I'm really confused. Are you saying that when filing jointly when itemizing you are capped at $24,000.00? Have you read Jean Scott's recent blog on this very topic?

GO IRISH!

[wildman49]

Ted no cap, you just want your write off of gaming losses to kick in above the 24k to get full dollar for dollar

[Tedlark]

Ah I see wildman, thanks for the clarification.