Good evening James. My name is ***** ***** I look forward to helping you.
No, you don't lose the $3,000. First, let's discuss your gambling winnings and losses. You can generally offset the gambling winnings with your gambling losses, but gambling losses are only deductible as itemized deductions and to the extent of gambling winnings. They are further limited by a 2% rule. In simple terms gambling losses are deductible to the extent they exceed 2% of adjusted gross income (the bot***** *****ne of form page 1 of form 1040). Given those limitations the deduction will usually be less than full value. For example if your Adjusted Gross Income were $100,000 then your gambling winnings of $10,000 would be offset by an itemized deduction of $8,000 ($10,000 less 2% of AGI of $100,000). You would end up with a taxable gambling winnings of $2,000. You also need to take into account the fact that gambling winnings get included with all you other income, less exemptions and deductions, to determine your taxable income and, hence your tax. From this tax your withholdings are then deducted to determine if you are due a refund or owe the government. I know this is a bit of a complicated matter but those are the rules.
Then, on your return, when you figure your net taxable income, your tax is based on that. It's here you get credit for the $3,000 because it's here that you include the $3,000 as tax already withheld and paid. So, the $3,000 is deducted from any tax that you owe and thus you've received credit for the full $3,000 withheld from your winnings. :)
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