We have had some discussion here of the possible new Medicare taxes on unearned income which might but hopefully won't impact gambling income (listed on the 1040 schedule as miscellaneous income).
Another thought comes to mind as I watch the Presidential Debate -- if Romney is elected and puts some sort of cap on itemized deductions (he's mentioned $17000 and $25000 and who knows what next) to make up for cutting tax rates, this could probably include capping deductions such as gambling losses, since things like charitable deductions, mortgage interest, etc., are being mentioned.
Let's say you earn $100000 in w2gs (it may sound like a lot, but even nonprofessional gamblers like myself have earned this and more because we play $1 and $5 machines). ... And list this as Misc. Income. Now you lose $110,000 in a year. Currently if you itemize you can deduct $100000, because you can only deduct up to the amount you win.
Let's hypothesize a $25000 cap on itemized deductions. Even if you have no mortgage income or other deductions, you'd end up with $75000 in income that would be taxed, despite actually losing money.
This phantom income, could well be taxed at 15%, or a lot more, depending on your tax rate.
argh!!
Another reason to consider avoiding w2gs (and maybe not voting for Mr. Romney, if you are so inclined.... )
