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If you win a jackpot at the casino ,000 and you have them…

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if you win a jackpot...
if you win a jackpot at the casino for 10,000 and you have them take out the taxes right there you walk away with aprox 7,000 cash. Now if you end of being negative 10,000 at end of the year do you just miss out on that 3,000 you paid in taxes because if you were to not take any taxes out and take 10,000 cash and at the end of the year be able to claim 10,000 in looses it would just be a wash correct?
Submitted: 2 years ago.Category: Tax
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2/27/2016
Tax Professional: Richard, Tax Attorney replied 2 years ago
Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 56,720
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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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Customer reply replied 2 years ago
I pretty much understand what you said, does it cost me more money to follow up with your answer?
Tax Professional: Richard, Tax Attorney replied 2 years ago

Thanks for following up. No, it does not. I'll be happy to help you with your follow up question for no additional cost. :)

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