For the sake of a concrete example, here are my circumstances (filing jointly):
2017 itemized deductions were $25000. Taxes paid to state and local authorities (referred to as SALT - state and local taxes) were $15000.
Under the 2018 SALT cap of $10000, I'll lose the benefit of $5000 in tax deductions. My allowable itemized deductions are reduced to $20000. In absence of gaming activity, I would take the standard deduction of $24000, gaining $4000 in deductions.
Now, let's add some modest gaming activity and presume that during the year $12k in w-g jackpots were hit, that these wins are reported as gross winnings, and that overall gaming activity netted a loss (so a offsetting gaming loss deduction of $12k is taken).
Here's where things get a bit ugly. Yes. gaming losses can be declared to the extent of going wins, thus a wash in this case. However, to the extent that total itemized deductions are increased to the $24000 standard deduction through declared gaming losses, the benefit of otherwise taking the standard deduction is reduced $ for $.
In the above example, the added $4000 deduction benefit (via the standard deduction) is lost with the first $4000 in gambling losses. Assuming a 35% marginal tax rate, gambling activities impose an effective tax penalty of $1400.
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vpFREE@yahoogroups.com, <onetime7500@...> wrote :
Since gambling losses are not subject to the 2% AGI floor, they are still allowed under the new law.
The problem for many folks will be the much higher $24,000 standard deduction if married, $12,000 if single. If you need to deduct losses, you will miss out on this higher standard deduction. Given that state and local taxes are limited to $10,000, this is likely to be a hidden tax on gambling for many people.
