The Republican Tax Plan: Analysis – Gambling Losses


Do you like to gamble? The rule for 2017 is that gambling losses are deductible as itemized deductions up to gambling winnings, which is like hobby losses. If you have other gambling expenses such as lodging, transportation and admission fees, you could deduct them as itemized deductions regardless of winnings.

The new law provides that all deductions for expenses incurred in carrying out wagering transactions, and not just gambling losses, are limited to the extent of gambling winnings. However, these expenses, including gambling losses, must be claimed as a miscellaneous itemized deduction, which the new law eliminates.

Sandy’s elaboration: This is an example of an unforeseen consequence of the new tax legislation. It is very possible that all gambling losses and expenses may become disallowed with the elimination of the miscellaneous itemized deductions. We won’t know until IRS issues some guidance in this area. If this is true, gamblers will be taxed on all income and yet all deductions will be disallowed.

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