A complex subject. Montyjones' comment that anyone with only $10,000 in total income for the year probably won't be paying income taxes seems apt.
Raising the stakes a bit, the first question would be, can you file as a professional? If so, you can list the total of winning sessions and the total of losing sessions on Schedule C, also list business expenses, and carry only the net profit over to Form 1040 as income. PROBABLY all states will also respect a professional's ability to calculate income in this fashion, but you should certainly check your own state's law carefully.
For the nonprofessional, the tax law's approach has always been to require reporting on a session by session basis. The total of winning sessions goes on Form 1040. The total of losing sessions goes on Schedule A. Note that it's entirely possible that you might receive a Form W-2G for $10,000, but in fact have a much smaller win or even a loss for the full session, from the time you start playing until you stop. You should be able to report the total SESSION result, rather than the essentially arbitrary figure shown on Form W-2G. The function of these tax reports is to furnish the IRS INFORMATION through an independent source, rather than to define a person's taxable income. That being said, if the calculation using the correct session approach results in a tax lower than would result from treating the amount reported on the Form W-2G as a session, I think you're very likely to get pushback from the IRS.
Nonprofessional Schedule A filers are at a severe disadvantage if, but for gambling income, they would not itemize deductions. They essentially get taxed on some amount of phantom income, until the itemized deductions equal what the standard deduction would have been. For state tax purposes, the situation is far worse, to the point of being sadistically punitive, in a growing number of states that don't allow the deduction of ANY losses on Schedule A, or that limit the deduction. For gamblers in those states, it doesn't pay to wake up in the morning. As others have noted, gamblers can also run into alternative minimum tax problems, or problems with any benefits the entitlement to which depends on AGI.
Canned programs like TurboTax will be virtually no help, and will probably be misleading or just plain wrong, on specialized issues like those faced by gamblers.
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