Step-by-Step Guide
Step 1: Verify Gambling Losses
Ensure the taxpayer has accurate records of their gambling losses, including receipts, wagering tickets, and statements from casinos.
Confirm that the losses are reported on Schedule A as itemized deductions.
Step 2: Enter Gambling Losses in TaxWise
In TaxWise, navigate to the Deductions section and select Schedule A for itemized deductions. You can get here by clicking on the '+' button to add a form.
Find the section for Other Miscellaneous Deductions and enter the total gambling losses. You can also search for "Deductions" and this will open the Sch A (for Itemized deductions)
3. Ensure the total amount does not exceed the amount of gambling winnings reported on the return.
4. When you open up the Sch A and go to Line 16, and you will be able to find where to enter gambling losses. Please be mindful that gambling winnings are typically also reported in the W2G.
Step 3: Ensure Proper Documentation
While gambling losses can only be deducted up to the amount of gambling winnings, the taxpayer must provide proper documentation to substantiate the losses in case of an IRS audit.
Keep a detailed record of gambling activities, including the type of gambling, dates, and locations.
Step 4: Review for Accuracy
Double-check that gambling winnings are properly reported as income on Form 1040, and that losses are reflected on Schedule A under deductions.
Ensure no more losses are entered than winnings to maintain compliance with IRS rules.
Step 5: Submit the Return
Once all information is accurate, review the return for any other errors.
Submit the return to the IRS, ensuring that gambling losses are correctly reported as part of itemized deductions.
By entering gambling losses accurately in TaxWise, taxpayers can optimize their return while staying compliant with IRS rules. 🚀