tax deduction question

It's a complete ripoff. Very unfair provision of the tax code.

What's even worse is gambling winnings in one year and losses in another year. Winnings are taxable and losses nondeductible!

Are we really arguing that gambling losses should be a tax write off? Lets think about how that would go for a bit in the grand scheme of things

ETA: if you want to argue it should be a write off equal to your winnings and never against your losses, I’d be fine with that.

The common refrain of “gambling losses can offset gambling winnings” is one if the biggest “not so fast my friends” provisions in the tax code.

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wonder if everyone reports these winnings

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If you’re gambling through legit companies, you’re getting a W-2G and better pick it up because the irs already knows about it.

Follow up question - would stocks have the same affect as gambling in this situation?

Situation A: Guy making $100k salary. no stock market actives.

His taxable income will be $86,000

Situation B: Guy making $100k salary. stock market profits $20k on one stock and loses $20k on another stock in a year.

His taxable income will be $86k or $100K?

seems they should be treated the same way if they aren't either way a zero net gain shouldn't change your taxable income

Probably true but why. both have risk. gambling is with money that has already been taxed. the operator pays tax on money you lose. you can write off stock losses ($3k) per year without having any gains. so why should someone be penalized for gambling when overall it was a net loss for the year?

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Probably true but why. both have risk

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There’s very clear differences in investing in the stock market and gambling. And if you don’t know them, then you probably don’t need to do either of them.

Investing in the stock market is an overall good for society and investors.

Gambling is a vice which you should be free to do. But there’s very clear reason why somebody would want to discourage you from doing it.

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Probably true but why. both have risk. gambling is with money that has already been taxed. the operator pays tax on money you lose. you can write off stock losses ($3k) per year without having any gains. so why should someone be penalized for gambling when overall it was a net loss for the year

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You just said it. Even with stocks, your losses are very limited, they basically just offset gains with a minor $3k deduction. They do get suspended if not deductible in the current year, but again we are talking about capital assets.

If you were able to just deduct gambling losses year to year, you would be able to manage your income with self-reported losses. You could buy casino chips at the end of the year and say you lost them.

I don’t blame the IRS one bit for not allowing leeway to deduct losses for gambling, as that person is clearly a risk taker and more likely to take an aggressive tax position.


Now, as another poster pointed out these rules are old and outdated in several ways. Mobile sports betting, in which it’s just as easy to track losses as gains, could easily report a net figure for the year. And itemizing really only works in rare circumstances, mostly for high earners. So the rules could be updated, but allowing deductible net losses is not within that scope.

If you want to gamble and be able to write it off cleanly get you an E*Trade account and start day trading lol