Question

Justin won $1,000 at lucky casino and $1,350 at riverboat casino. his losses for the year at lucky casino were $2,000 and his losses at riverboat were $800. he also spent $100 for lottery tickets without winning anything. how much can he deduct on schedule a (form 1040), itemized deductions, for gambling losses?

Answer 1

Justin can deduct $2,350 for his gambling losses on Schedule A (Form 1040), which is the amount of his reported gambling winnings. His total losses exceeded his winnings, but IRS rules only allow a deduction up to the amount of the winnings.

Step-by-step explanation:

When it comes to gambling losses and their tax deductibility, the IRS allows you to deduct gambling losses only up to the amount of gambling winnings that you report as income. In this scenario, Justin won $1,000 at Lucky Casino and $1,350 at Riverboat Casino, which totals his gambling winnings to $2,350. His losses were $2,000 at Lucky Casino, $800 at Riverboat, and an additional $100 spent on lottery tickets. Therefore, Justin's total losses amounted to $2,900.

Since IRS rules stipulate that you can't deduct more than you've won, Justin can only claim a deduction for gambling losses up to the amount he won, which is $2,350. Thus, even though his total losses are $2,900, the amount he can claim on Schedule A (Form 1040) will be limited to his total winnings of $2,350.

Answer 2

Justin can claim gambling losses of up to $2,350 on Schedule A (Form 1040), which is the total amount of his gambling winnings for the year, even though his total losses were $2,900.

Step-by-step explanation:

The student is asking about gambling losses and how much can be deducted on Schedule A (Form 1040), Itemized Deductions, for gambling losses as per tax law requirements.

According to the IRS rules, a taxpayer can claim a deduction for gambling losses up to the amount of gambling winnings.

In this case, Justin won a total of $2,350 ($1,000 + $1,350) in gambling winnings throughout the year. His gambling losses amounted to $2,900 ($2,000 + $800 + $100 for lottery tickets).

Therefore, the amount Justin can claim for a deduction is limited to his total winnings of $2,350.