Professional gamblers filed a Schedule C - for self employment income. Losses and gains were integrated into that schedule. They got to deduct expenses related to gambling from any income but no longer can they take a net operating loss against other income that year. They paid 15.3% social security / Medicare taxes along with their normal taxes. As noted, this does make any difference to the vast majority of us.
For the non-professional gambler, reporting is quite different. Gambling winnings are reported on the front page of the 1040 as misc. income. Losses are not netted against gains. Instead, losses are reported as an itemized deduction on Schedule A. Thing is, most people are not itemizing deductions under the new tax code. Sure, you ***COULD*** itemize but doing so means you give up a $24,000 standard deduction. Assuming the provisions are actual enforced as written that most people will pay taxes on "winnings" even though their losses were greater than said winnings because the first $24,000 in losses don't effectively count. Or in other words your would pay less in taxes by paying what seems to be an unreasonable tax on phantom "winnings" rather than giving up your $24,000 standard deduction.
Also worth noting, winnings and losses are reported by "session". Each time you sit at a new table or visit the slot machines, that is a new session. A $1,000 loss at the crap table tonight is reported separately from a $500 win at black jack both of which are separate from a $400 win at a poker table. You might go to your room thinking you lost $100 today but the IRS sees it as you won $500 & $400 - and owe taxes on that $900. The $1,000 loss is itemized and likely can't effectively be used to reduce your reported gambling income. { note that you never were able to take a net gambling loss on your taxes, just that it was easier to "net out" your gains and losses. }
This is potentially catastrophic for the casual gambler because it means everyone who tried their luck in a casino or over a poker table is subject to taxation on their GROSS winnings without considering their losses. Thus everyone who sets foot in a casino is likely owe taxes on money they didn't actually win. Sounds draconian, but that seems to be the way the tax code will be officially interpreted. [ you can find a far greater discussion on 2+2 offered by far more qualified people than me ].
File this under tax laws that could cut your nuts off -=- DrStrange
: So if this law change affects you, please seek expert advice.
